After a rough 2022, Meta Platforms (NASDAQ:META) CEO Mark Zuckerberg promised that 2023 would be a “year of efficiency.” How’s that working out so far? Actually, Meta Platforms’ results show that Zuckerberg’s plan is working out well. Currently, I’m bullish on META stock and am prepared for it to move higher in the fourth quarter.
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Meta Platforms is a diversified technology company that owns Facebook, Instagram, WhatsApp, and Threads. The company also has financial interests in the Metaverse and artificial intelligence (AI).
Granted, not everybody is a fan of Zuckerberg and Meta Platforms. Some regulators have the company in their crosshairs. However, they haven’t stopped Meta Platforms from earning piles of money and rewarding the company’s shareholders with excellent long-term returns.
Meta Platforms Stock Dives
Meta Platforms is a “Magnificent Seven” company, but it’s certainly not the only one that stock traders are paying attention to now. Throughout the trading session on October 25, META stock was deep in the red, but it wasn’t Meta Platforms’ fault. Actually, it was due to the problems of another “Magnificent Seven” technology company.
Specifically, Alphabet’s (NASDAQ:GOOGL) (NASDAQ:GOOG) investors were having a rough day because the company’s stock fell 9.5%. This occurred even though Alphabet beat analysts’ third-quarter Fiscal Year 2023 consensus earnings forecast.
Consequently, it seems that short-term stock traders decided to dump all mega-cap tech names at the same time. Hence, Meta Platforms stock ended the day down 4%.
Sometimes, life isn’t fair on Wall Street. Yet, the buyers had a brief moment of revenge in after-hours trading. META stock jumped by around 3% soon after the market closed.
It wasn’t hard to figure out what happened. Meta Platforms just scored its third consecutive quarterly EPS beat. Surely, Meta’s investors must have breathed a sigh of relief. However, the stock ended up coming back down shortly after.
Zuckerberg and Meta Platforms Have a “Good Quarter”
Referring to the company’s third-quarter 2023 results, Zuckerberg declared that Meta Platforms “had a good quarter for our community and business.” I’d say that’s an understatement, as Meta Platforms knocked it out of the park in the areas that mattered the most.
Let’s start with the basics. Meta Platforms’ revenue grew by 23% year-over-year to $34.15 billion, exceeding the Street’s estimate of $33.5 billion. Importantly, Meta Platforms’ advertising revenue increased to a whopping $33.643 billion versus $27.237 billion in the year-earlier quarter. Furthermore, the company’s “daily active people” count grew 7% year-over-year to 3.14 billion.
In other words, Meta Platforms still has an army of users across its social media apps, and ad revenue is coming in strong. At the same time, Meta Platforms kept Zuckerberg’s “year of efficiency” promise, as the company’s Q3-2023 total costs and expenses declined by 7% year-over-year.
Much of this reduction in costs and expenses, no doubt, was due to Meta Platforms’ 24% year-over-year headcount reduction. That’s a painful measure to take, but it certainly contributed to the company’s quarterly earnings beat.
On that topic, Meta Platforms reported diluted EPS of $4.39, up 168% year-over-year and above Wall Street’s call for $3.64 per share. That’s what can happen when a company consistently keeps users on its social media platforms while also cutting its financial outlays.
Is META Stock a Buy, According to Analysts?
On TipRanks, META comes in as a Strong Buy based on 41 Buy ratings (out of 43 analysts, believe it or not), two Hold ratings, and no Sell ratings assigned by analysts in the past three months. The average Meta Platforms price target is $377.46, implying 26% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell META stock, the most profitable analyst covering the stock (on a one-year timeframe) is Brad Erickson of RBC Capital, with an average return of 48.13% per rating and a 70% success rate. Click on the image below to learn more.
Conclusion: Should You Consider META Stock?
Zuckerberg and Meta Platforms will always have their critics. Sometimes, the criticism may be justified. As a market watcher, however, I’m looking at a winner with Meta Platforms stock. Despite Zuckerberg’s understatement, Meta Platforms’ “good quarter” was actually outstanding. So, don’t let Alphabet’s disastrous day put you in a bad mood. Meta Platforms has earned its place as a “Magnificent Seven” tech giant, and I believe the stock is worth considering.
