Why Facebook’s Meta stock is soaring 18% in after-hours trading

Faceb..Meta Platforms has just reported its latest earnings…
The post Why Facebook’s Meta stock is soaring 18% in after-hours trading appeared first on The Motley Fool Australia. –

2022 has been a bit of a ‘back to the future’ year for the Meta Platforms Inc (NASDAQ: FB) stock price. Meta, the US company formerly known as Facebook, has seen its share price almost halved over 2022 so far. This morning (our time), the company closed at US$174.95 a share after hitting a new 52-week low of US$169 in last night’s trading. That is the lowest share price Meta has had in front of it since the COVID crash of 2020.

But the company’s after-hours pricing tells a markedly different tale. During after-market trading, Meta shares ended up closing substantially higher at US$207.09 a share. That’s a good 18.37% above its closing price.

So what could have caused such a dramatic re-evaluation of Meta stock from the market?

Well, the company’s earnings report, of course. Meta reported its results for the three months to 31 March 2022 after normal US market trading closed this morning.

Meta stock price jumps on earnings report

In these results, Meta reported an increase in daily active users to 1.96 billion, an increase of 31 million over the quarter and 4% year-over-year. Monthly active users also rose, by 3% to 2.94 billion. In terms of revenue, the company announced revenues of US$27.9 billion, a year-over-year rise of 6.6%. 

But Meta also revealed a rise in total costs and expenses of 31% to US$19.38 billion. This was driven in part by an increase in staff headcount to 77,805, up 29% year-over-year.

Diluted earnings per share (EPS) fell over the quarter. Meta reported EPS of US$2.72 per share, down 18% from US$3.30.

Meta chief financial officer Sheryl Sandberg added the following:

We expect second quarter 2022 total revenue to be in the range of $28-30 billion. This outlook reflects a continuation of the trends impacting revenue growth in the first quarter, including softness in the back half of the first quarter that coincided with the war in Ukraine…

We expect 2022 total expenses to be in the range of $87-92 billion, lowered from our prior outlook of $90-95 billion. We expect 2022 expense growth to be driven primarily by the Family of Apps segment, followed by Reality Labs.

Why did the markets have this reaction?

So it’s clear that investors found a lot to be excited about in this earnings report, judging by the enthusiastic after-hours share price reaction. Here’s some of what eToro analyst Josh Gilbert had to say on Meta’s earnings and the market’s reaction:

It was a mixed quarter for Meta, as the social media giant missed revenue expectations, but saw a return in daily user growth after declining in the previous quarter. It was a better than feared result for Meta’s investors. 

Meta’s daily active users jumped to 1.96 billion, up 31 million from the last quarter and beating expectations of 1.94 billion. This metric has helped ease concerns, at least for now, that Facebook was losing steam and that the platform had ‘peaked’. 

The company’s advertising revenue experienced the slowest growth year-on-year for over a decade at just 6 per cent. This was, in part, thanks to Apple’s iOS changes that have restricted Meta’s ability to offer targeted ads. This is going to be a lingering issue for Meta, as it could potentially cost the company upwards of USD$10 billion in 2022…

At the current Meta stock price, this US tech giant has a market capitalisation of US$474.91 billion. 

The post Why Facebook’s Meta stock is soaring 18% in after-hours trading appeared first on The Motley Fool Australia.

Should you invest $1,000 in Meta Platforms right now?

Before you consider Meta Platforms, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Meta Platforms wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

More reading

Have ASX tech shares finally reached the bottom?

Where will Meta Platforms be in 5 years?

Prediction: 5 billion people will be in the Metaverse by 2030

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Meta Platforms, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Meta Platforms, Inc. The Motley Fool Australia has recommended Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!