Meta Platforms Stock is Racing Higher, But…

Feb 2, 2023

Meta Platforms is showing big signs of life again.

At the moment, shares are up $36 a share, or about 24% on a revenue beat. 

However, while sales came in at $32.2 billion, which was above expectations for $31.6 billion, EPS missed badly.  In fact, the company posted EPS of $1.76, which was well below expectation for $2.27.

According to Barron’s, “Boosting the shares after an earnings miss was a shareholder-friendly move authorizing a new $40 billion stock buyback program, with $10.87 billion in repurchases remaining on the books from its previous program after $6.91 billion in buybacks last quarter. Investors also smiled about guidance for full-year expenses, which was reduced to between $85 billion and $95 billion, from a prior range of $94 billion to $100 billion.”

Also helping, Meta’s daily active users crossed two billion for the first time, as compared to expectations for 1.99 billion.  Monthly active users came in at 2.96 billion, as compared to expectations for 2.98 billion. 

And, according to CNBC, “Meta said it expects revenue in the first quarter of between $26 billion and $28.5 billion.  Analysts were expecting sales of $27.1 billion, according to Refinitv. Sales in the first quarter of 2021 came in at $27.9 billion. Should Meta reach the high end of its guidance range, the company could end its streak of year-over-year declines.”

While the report was far from perfect, analysts are still bullish.

Evercore ISI analysts now have a $275 price target on the stock.  The firm believes the company has “materially reduced expense projections” and was pleased with the buyback program.  Analysts at Rosenblatt have a buy rating, with a price target of $220, pleased with the company’s “enticing” valuation.

However, it may be best to remain on the sidelines with the META stock.

Earnings really weren’t anything to write home about.  There are still plenty of uncertainties here.  And the stock’s latest $36 gap may have sent the META stock up too high, too fast.

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