To The Moon

$Meta Platforms, Inc.(META)$ is set to release its Q4 2024 financial results on Jan 29 after the US market closes.

According to Bloomberg's unanimous expectations, analysts expect Meta's Q4 revenue to be $47 billion, up 17% year-on-year. Adjusted EPS is expected to grow 27% YoY to $6.77. Adjusted net income will be $17.84 billion, up 27.3% from a year earlier.

Meta Platforms (META) Last Earnings Call Positive With A Significant 11.59% Change Since

Since META last earnings call on 30 October 2024 which has gathered a positive sentiment, it has gained 11.59% change.

The earnings call reflected a positive sentiment with strong revenue growth, increased user engagement, and successful AI and hardware innovations. However, these were partially offset by increased expenses and significant operating losses in Reality Labs.

Meta Platforms (META) Guidance On AI Advancement To Watch

During the Meta Q3 2024 earnings call, the company provided several key metrics and guidance for the future. Total revenue for the quarter was reported at $40.6 billion, marking a 19% increase year-over-year, while total expenses rose by 14% to $23.2 billion.

The operating income was $17.4 billion, resulting in a 43% operating margin, and net income was $15.7 billion or $6.03 per share. Notably, Meta's daily active users across its Family of Apps surpassed 3.2 billion, and ad revenue reached $39.9 billion, growing by 19%.

Capital expenditures were highlighted at $9.2 billion, with expectations for further significant growth in 2025. The company anticipates Q4 2024 revenue to be between $45 billion and $48 billion, and expenses for the full year are projected at $96 to $98 billion.

Meta is also heavily investing in AI and reality labs, with AI-driven advancements contributing to an 8% increase in time spent on Facebook and a 6% increase on Instagram.

If we looked at how META has successfully averted the on slaughter caused by DeepSeek, it has managed to gain 1.91%, this show that its AI-driven advancements is not dependent on OpenAI which has faced a fierce competition from DeepSeek.

I am looking for to see if META would be able to reduce the expenses spend on Reality Labs.

Meta Platforms (META) Price Target

Based on 44 Wall Street analysts offering 12 month price targets for Meta Platforms in the last 3 months. The average price target is $692.23 with a high forecast of $811.00 and a low forecast of $530.00. The average price target represents a 4.90% change from the last price of $659.88.

If we were to look at how META have been performing over the past week when market is in volatility, META does not seem to be affected much.

Key Metrics and Challenges To Watch For META Earnings

Strong Revenue Growth But Total Expenses To Watch Too

Q3 total revenue was $40.6 billion, up 19% or 20% on a constant currency basis but Q3 total expenses were $23.2 billion, up 14% compared to last year, driven by higher infrastructure and headcount-related expenses.

Revenue growth in the Asia Pacific region slowed to 15%, decelerating from Q2 growth rate of 28%, due to weaker demand from China-based advertisers.

User Engagement Increase

There are now more than 3.2 billion people using at least one of Meta's apps daily. Time spent on Facebook increased by 8% and on Instagram by 6% this year.

AI and Llama Adoption

Meta AI now has more than 500 million monthly actives. Llama token usage has grown exponentially this year. Meta AI improvements led to significant increases in engagement.

Ad Revenue and Pricing

Q3 Family of Apps ad revenue was $39.9 billion, up 19% or 20% on a constant currency basis. Average price per ad increased by 11% due to improved ad performance and increased advertiser demand.

Innovations in Reality Labs But Expenses A Concern

Revenue for Reality Labs was $270 million, up 29%, driven by hardware sales such as Ray-Ban meta glasses and the new Quest 3S mixed reality headset.

Reality Labs expenses were $4.7 billion, leading to an operating loss of $4.4 billion, reflecting a 19% increase in expenses year-over-year.

Technical Analysis - Multi-timeframe (MTF)

If we were to look at META technicals, it has been showing very promising upside movement, because of its strength to perform despite the volatility we experienced at the beginning of January.

We are seeing that META is trading comfortably above the 200-MA, and MACD have been on an upside movement since the bullish crossover in mid-January. MTF is also giving a very encouraging strong upward trend signal.

Summary

I would think META could surprise in its earnings, if we were to see a significant reduction in the Reality Labs expenses, because the focus should be on their AI advancement, which could make them one of the significant winners in the AI race.

Hope META could enhance their AI model, and this could make their competitive advantage more appealing to investors.

Appreciate if you could share your thoughts in the comment section whether you think META could provide an earnings surprise if we saw a significant reduction in its expenses on Reality Labs.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.