Meta stock beats earnings estimates, surges by 4%

Meta (META) beats earnings expectations in Q3, with advertising revenue of $33.64 billion and a 31% increase in ad impressions. Shares rise 4% in after-hours trading.

Meta, the parent company of Facebook and Instagram, announced its third quarter earnings, surpassing expectations in both revenue and profit. As a result, the company's shares experienced a 4% surge in after-hours trading. Meta has been focusing on two key areas of interest for investors - its artificial intelligence (AI) efforts and its position in the digital advertising market.

In terms of advertising revenue, Meta reported $33.64 billion for Q3, exceeding the expected $32.94 billion. The company also outperformed estimates for ad impressions, with a year-over-year increase of 31% compared to the expected 29.6%. This positive performance has contributed to Meta's shares rising by approximately 140% year to date, significantly outperforming the S&P 500 and the Nasdaq Internet Index.

Despite these successes, Meta is facing potential legal risks in the near future. The company is currently facing lawsuits from 42 attorneys general, who claim that Facebook and Instagram's features targeted at children are addictive. Meta expressed disappointment in the attorneys general's approach, stating that they should have worked collaboratively with industry companies to establish clear standards for age-appropriate apps.

Analysts on Wall Street have provided recommendations for Meta, with 60 buy ratings, seven holds, and two sells. Meta also revised its 2023 capital expenditures outlook, lowering the range to $27-29 billion, down from the previously announced $27-30 billion. The company's Family of Apps business, which includes WhatsApp, generated over $33 billion in revenue.

However, Meta's mixed reality business, Reality Labs, has faced controversy. The company has incurred losses of over $20 billion in running Reality Labs, with $13.7 billion of that amount occurring in 2022. Meta anticipates that these losses will continue and increase significantly in 2023.

Meta's CEO, Mark Zuckerberg, expressed satisfaction with the company's performance, highlighting advancements in AI and mixed reality, including the launch of Quest 3, Ray-Ban Meta smart glasses, and their AI studio.

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