Meta
Platforms
is
(META)
is
the
latest
of
the
Magnificent
Seven
stocks
to
report
quarterly
earnings.
Here’s
what
our
analyst
thought
of
the
company’s
update.
•
Fair
Value
Estimate:
$400
•
Morningstar
Rating:
2
stars
•
Morningstar
Economic
Moat
Rating:
Narrow
•
Morningstar
Uncertainty
Rating:
High
What
We
Thought
of
Meta’s
Earnings
Meta posted
a
solid
first
quarter,
with
revenue
growth
and
management’s
second-quarter
outlook,
while
modestly
disappointing
relative
to
FactSet
consensus,
putting
the
firm
on
a
path
to
exceed
our
2024
revenue
expectations.
However,
the
firm
increased
its
budget
for
both
full-year
operating
expenses
and
capital
spending,
with
CEO
Mark
Zuckerberg
convinced
that
the
firm
should
“invest
significantly
more
in
the
coming
years”
into
artificial
intelligence.
Zuckerberg
expects
a
big
step
up
in
investment
before
AI
services
generate
meaningful
direct
revenue.
After
accounting
for
faster
revenue
and
expense
growth
in
our
forecast,
we’re
leaving
our
fair
value
estimate
at
$400
per
share.
With
the
selloff
following
the
earnings
release,
we
believe
the
shares
are
fairly
valued.
Total
revenue
increased
27%
to
$36.5
billion
during
the
first
quarter,
with
growth
accelerating
across
geographies.
Meta
served
3.24
billion
daily
users
across
its
apps
during
the
quarter,
up
7%
versus
a
year
ago.
The
volume
of
ads
delivered
increased
20%
year
on
year,
indicating
continued
strong
growth
in
engagement
thanks
to
improving
content
recommendations,
a
practical
benefit
of
recent
AI
investment.
Meta
indicated
that
more
than
50%
of
the
content
delivered
on
Instagram
and
30%
on
Facebook
is
now
AI-recommended.
Ad
pricing
increased
6%
year
over
year,
showing
continued
acceleration
from
the
fourth
quarter
after
nearly
two
years
of
declines
as
advertiser
demand
remains
strong.
Operating
expenses
increased
6%
compared
with
a
year
ago,
with
headcount
increasing
for
the
second
consecutive
quarter.
The
operating
margin
expanded
to
38%
from
25%
a
year
ago.
Meta
now
expects
operating
expenses
to
total
$96
billion-$99
billion
this
year,
raising
the
low
end
of
the
range
of
its
prior
forecast
from
$94
billion.
Capital
spending
is
expected
in
the
range
of
$35
billion-$40
billion,
up
from
$30
billion-$37
billion
previously,
and
the
firm
again
said
that
it
plans
to
increase
spending
further
in
2025.
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