Meta Platforms (NASDAQ:META) stock rose 10% after reporting results and guidance that beat expectations.
Meta said it earned $7.8 billion, $2.98 per share, for the June quarter, on revenue of $32 billion. Revenue was up 11%, while net income was up 16% compared to 2022.
Chief Financial Officer Susan Li also predicted third-quarter revenue will come in at $32-34.5 billion, up 15% year-over-year. The company will benefit from a foreign currency “tailwind” as the dollar’s value declines against other currencies.
In pre-market trading, Meta was trading near $330 per share, a market cap approaching $850 billion. Shares are now up 164% in 2023 but remain down from two years ago. Meta’s all-time high was over $379 per share in September 2021.
Meta Chapter and Verse
Traders were excited about Meta’s improved ad targeting and cost cuts. Ad impressions rose 34% while the cost per ad fell 16%, with big gains in Asia. Meta took $780 million in charges for consolidating facilities and cutting staff during the quarter.
However, CEO Mark Zuckerberg is sticking by his big “metaverse” bet, despite media reports to the contrary. He warned that investments in Meta’s Reality Labs unit, which makes its Virtual Reality (VR) headsets and software, will continue to grow. Reality Labs lost $3.7 billion during the June quarter.
Meta’s efforts in generative artificial intelligence (AI), where it has open-sourced key technologies, are also a contrast to other Cloud Czars, which have urged government regulation to control the software. The cloud unit of Alibaba Group Holding (NASDAQ:BABA), which is being spun off from its Chinese parent, recently said it will support Meta’s LLaMA model.
One topic not mentioned on the company’s conference call was Threads, Meta’s effort to compete with Twitter or “X” in the social media space. Recent reports show user growth, and engagement, declining following an initial surge.
META Stock: What Happens Next?
Meta remains at the center of a global political storm over AI. Its dominant position providing free services in the developing world has proven more powerful than any missteps with Threads or the metaverse. I admit I underestimated it.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
