Technology and social media giant Meta Platforms (NASDAQ:META) will announce its fourth quarter 2023 earnings after the market closes on Thursday, February 1. Higher advertising revenue and lower operating costs will likely drive its top and bottom lines in Q4.
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But before we dig deeper, it’s worth highlighting that Meta stock has gained nearly 169% over the past year. Moreover, it once again achieved the $1 trillion in market cap.
META – Q4 Expectations
Wall Street analysts expect Meta to post revenue of $39.12 billion in Q4, up about 21.6% year-over-year. The company’s top line could continue to benefit from higher Family of Apps ad revenue in Q4, led by the online commerce vertical.
Notably, the higher user engagement on Facebook, Instagram, and Reels will drive its ad revenues. Further, the company is aggressively investing in Generative Artificial Intelligence (AI) and incorporating it into its offerings, which will likely boost user engagement and revenue growth.
The leverage from higher sales, a lean cost structure, and operating efficiency will likely push its earnings higher. Analysts expect Meta to post earnings of $4.83 per share in the fourth quarter, up substantially from $1.76 in the prior-year quarter.
Analysts Upbeat Ahead of Q4 Earnings
Monness analyst Brian White reiterated the Buy recommendation on Meta stock on January 11. The analyst sees Meta as well-positioned to gain from the secular digital ad trend and lower cost structure. Further, White expects Meta’s growth to accelerate in Q4.
Echoing similar sentiments, TD Cowen analyst John Blackledge maintained a Buy on META stock on January 9. Blackledge expects Meta to report strong Q4 financials, with its revenue likely to beat the consensus estimate. Further, the analyst expects the company’s earnings to benefit from lower expenses.
Is META Stock a Buy, Hold, or Sell?
Meta stock has a Strong Buy consensus rating based on 27 Buys and one Hold recommendation. Analysts’ average price target of $426.11 implies 6.51% upside potential from current levels.
Insights from Options Trading Activity
It’s worth noting that options traders are pricing in a +/- 7.15% move in Meta stock on earnings, higher than the previous quarter’s earnings-related move of -3.73%.
The anticipated move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
Learn more about TipRanks’ Options tool here.
Bottom Line
Meta’s Q4 earnings will likely benefit from the expected increase in ad revenues and the company’s focus on lowering costs and driving efficiency. Further, Wall Street analysts are upbeat about META stock ahead of earnings despite the significant appreciation in value over the past year.
