Shares of Meta Platforms (NASDAQ:FB) are up as much as 17% in premarket trading Thursday after the social media company reported Q1 results and offered guidance.
Meta reported a Q1 EPS of $2.72, topping the consensus estimates of $2.56, according to Refinitiv. Revenue came in at $27.91 billion, missing the estimates of $28.2 billion.
The company reported 1.96 billion Daily Active Users (DAUs) in the period, just above the expected 1.95 billion. Monthly Active Users (MAUs) totaled 2.94 billion in Q1, short of the analyst consensus of 2.97 billion.
FB reported average revenue per user (ARPU) of $9.54, while analysts were looking for $9.50. The report comes after Meta posted disappointing Q4 2021 results that sent the stock down 26%, marking its worst day ever.
For Q2, the Facebook parent company expects revenue in the range of $28 billion to $30 billion, missing the analyst consensus of $30.6 billion. The forecast accounts for continued trends from Q1, such as timid revenue growth.
Facebook’s app lineup including Instagram and WhatsApp accounted for 97.5% of revenue in Q1, while the remaining portion came from the metaverse-focused Reality Labs business. The family of apps segment saw a net income drop of 13% from the year-ago period to $11.48 billion, while Reality Labs lost $2.96 billion in the quarter, compared to a $1.83 billion loss in the same period last year.
Facebook also reduced its total expenses outlook for the year to $87 billion - $92 billion, down from its previous forecast of $90 billion to $95 billion.
“We think while these times are challenging, over the long run, we do have a very strong competitive advantage when you look across the opportunities advertisers have to advertise both offline and online,” COO Sheryl Sandberg said.
Raymond James analyst Aaron Kessler lowered the price target to $290.00 per share from the prior $340.00 after both Q1 and Q2 came in “better than feared.”
“We maintain our Outperform rating given: 1) we continue to expect solid long-term ad growth of 10% plus; 2) expect continued monetization of newer platforms and formats (e.g. Reels); and 3) we believe valuation is attractive at ~12x our 2022E Core EPS (ex Reality Labs) vs. mid-teens LT EPS growth,” Kessler said in a client note.
Goldman Sachs analyst Eric Sheridan also lowered the price target to $300.00 per share from $355.00 and sees “a favorable risk/reward skew to the shares from current levels.”
“Similar to the parallel of Summer FY2018 (the last large scaled product transition) that we referenced in our review note last quarter, we see Meta on a path to rebuilding investor confidence in the medium/long-term narratives and see the potential for revenue re-acceleration in 2H’22 (as comps ease) as a possible path forward to better stock performance. We take a more conservative approach across our five year forecast period to Meta’s revenue growth and margin cadence to reset for a more conservative assumption around the time for product transition,” Sheridan wrote in a note.
Mizuho analyst James Lee also reiterated a Buy rating as he sees an “attractive entry point” in FB stock. He added that sentiment appears to bottom.
By Senad Karaahmetovic