26 October 2023
If you are covering Meta’s latest financial results, please find below a comment from Ben Barringer, technology analyst at Quilter Cheviot:
“Meta has seen a reversal in its share price this morning after an initial bounce following the release of its Q3 statement, after it talked about a softer advertising spend in Q4 due to the macro volatility including the Middle East conflict. Otherwise, it was generally a good set of numbers from Meta delivering 21% sales growth, 3% ahead of expectations. This was driven by strong engagement and decent user growth amongst the Facebook family of apps, with Meta confirming its X competitor, Threads, has already reached 100m users.
“Meta has significantly reduced headcount, down 24% over the year, contributing to a substantially increased profit margin, up 20% to 40%. There was a wide gap in forward guidance on growth at 13-24%, indicating the more uncertain picture ahead. However cost and capital expenditure guidance are better than expected which will help profitability.
“Meta is a bit AI beneficiary, with AI driving its ad platform in terms of better targeting and getting better return on investment for advertisers. It is rolling out tools that will help small businesses have better AI assistance, such as chat bots and AI-driven content creation. Meta has also seen 30 million downloads of its Llama 2 open-source large language AI model.
“While Meta is outperforming its competitors, it seems there is no escape from the macro environment and the conflict in the Middle East and we wait to see how substantially it impacts its numbers in Q4.”
