Meta Platforms (META) stock rose out of the gate Thursday after the parent company of Facebook and Instagram beat top- and bottom-line expectations for its fourth quarter.
In the three months ending December 31, Meta's revenue increased 20.6% year over year to $48.4 billion, boosted by a 5% rise in its family daily active people (DAP) to 3.35 billion. Its earnings per share (EPS) were up 50.5% from the year-ago period to $8.02.
"We continue to make good progress on AI [artificial intelligence], glasses, and the future of social media," said Meta Platforms CEO Mark Zuckerberg in a statement. "I'm excited to see these efforts scale further in 2025."
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The results beat analysts' expectations. Wall Street was anticipating revenue of $47 billion, earnings of $6.77 per share and daily active people of 3.32 billion, according to CNBC.
For its first quarter, Meta said it expects to achieve revenue between $39.5 billion to $41.8 billion. The midpoint of this range, $40.65 billion, came in below analysts' expectations for revenue of $41.7 billion, but Meta added that its outlook assumes a 3% headwind related to foreign currency translation.
"Meta is suffering from challenging macroeconomic conditions that are negatively impacting its advertising spending," says Brian Mulberry, client portfolio manager at Zacks Investment Management. The company is also facing "unfavorable forex, targeting and measurement headwinds due to Apple's (AAPL) iOS changes, normalization of e-commerce after the pandemic peak and higher inflation," he adds.
Nevertheless, Zuckerberg says that "this is going to be a really big year" for Meta and that "the trajectory for most of our long-term initiatives" will be "a lot clearer by the end of this year."
As for spending levels, which Wall Street is keeping a close eye on, Meta said it expects total expenses in 2025 to be in the range of $114 billion to $119 billion, with infrastructure believed to be the "single largest driver of expense growth."
Meta pays Trump
In separate news, media reports indicate Meta Platforms agreed to pay $25 million to settle a lawsuit brought against the company by President Donald Trump after his accounts were suspended in 2021 following the January 6 attack on the U.S. Capitol.
According to The Wall Street Journal, $22 million will go toward building Trump's presidential library with the remainder used to pay legal fees and plaintiffs.
Is META stock a buy, sell or hold?
Meta Platforms has been a powerhouse on the price charts over the past 12 months, up 69% on a total return basis (price change plus dividends) vs the S&P 500's 24% gain. Unsurprisingly, Wall Street is very bullish on the Magnificent 7 stock.
According to S&P Global Market Intelligence, the average analyst target price for the large-cap stock is $717.79, representing implied upside of more than 6% to its January 29 close. Additionally, the consensus recommendation is Strong Buy.
Financial services firm Wedbush maintained its Outperform rating (equivalent to a Buy) after Wednesday night's earnings release and raised its price target to $770 from $700.
"Meta reported strong fourth-quarter results with revenue roughly 3% ahead of the Street and operating income around 17% above consensus," says Wedbush analyst Scott Devitt. "First-quarter revenue guidance was in line with consensus on an forex-neutral basis, and we expect investors will look past near-term forex headwinds as the company continues to deliver improvements in user engagement and monetization."
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