Meta shares rise as earnings and revenue exceed expectations
Important Points
After the company exceeded Wall Street estimates for profits and revenue and released a better-than-expected projection for the current term, Meta shares surged during extended trading on Wednesday.
The parent company of Facebook is significantly investing in virtual reality and artificial intelligence, two areas of great interest to investors.
After the company exceeded Wall Street estimates for revenue and earnings and released a better-than-expected forecast for the current term, Meta shares increased by almost 7% during extended trading on Wednesday.
These are the outcomes in relation to LSEG estimates:
Profits: $5.16 per share versus the anticipated $4.73 per share
Revenue: $39.07 billion versus the projected $38.31 billion
Meta forecasted $38.5 billion to $41 billion in revenue for the third quarter, with $39.75 billion sitting in the middle of the range. The prediction of $39.1 billion was anticipated by analysts.
For the fourth consecutive quarter, the parent company of Facebook recorded revenue growth of more than 20% in the second quarter, up from $32 billion a year earlier. From $7.79 billion, or $2.98 per share, a year earlier, net income increased 73% to $13.47 billion.The company's primary business, digital advertising, continues to see share growth according to Meta's data. The Facebook and Instagram applications account for the majority of advertising revenue, which increased by 22% over the previous year. Google ad sales increased by 11% last week, according to Alphabet, the company's main rival; estimates for YouTube were absent.
According to Meta's user data, StreetAccount's projections for the quarter's 3.27 billion daily active persons (DAP) were met. Meta used to release data on the number of active users on a daily and monthly basis for its Messenger and Facebook apps. The number of users accessing any one of its apps is represented by the DAP figure.Beginning in late 2022, cost-cutting measures have improved Meta's financials. Over the course of several waves of layoffs, the corporation terminated around 21,000 positions. Operating income increased to $14.9 billion, up 58% from the same time last year, and Meta's operating margin increased to 38% from 29%.
As of June 30, Meta reported a 1% decrease in headcount year over year to 70,799 employees.
Zuckerberg stated earlier this year that by the end of 2024, 350,000 Nvidia H100 graphics cards—expensive computer chips used to train so-called big language models and accompanying AI software—will be part of Meta's processing infrastructure.The most recent iteration of Meta's Llama AI model, which comes in three flavors and is available to developers via open source for free, was unveiled last week as part of the company's AI push. Meta's efforts to guarantee that its technology is competitive with competitors such as OpenAI and Google are demonstrated by the staggering 405 billion parameters included in one version of the Llama 3.1 technology. These parameters are measures that represent the size and capabilities of the AI model.
As of Wednesday's closing, Meta shares had gained 34 percent on the year, double the Nasdaq's gains. After hours, the stock increased 6.9% to $507.45.
At 5:00 p.m. ET, executives will speak with analysts on the outcomes via phone.
