Meta Platforms, Inc. META surprised investors with forecast-beating results and an optimistic outlook for the third quarter after the market close on Wednesday.
What Happened: Meta saw a remarkable 11% year-over-year revenue increase in the second quarter, marking its first double-digit growth since Q4 2021. Net income also rose by 16%, reaching an impressive $7.8 billion. The third-quarter guidance of $32 billion-$34.5 billion far exceeded the consensus estimate of $28.29 billion, leaving analysts quite pleased with the social media giant’s performance.
Analysts Laud Results: Gene Munster from Deepwater Asset Management highlighted that the year of cost-cutting is over, and Meta is now focused on efficiency growth.
He anticipates the company will unveil new artificial intelligence products, such as creative tools for Instagram and the metaverse, at their Connect conference on Sept. 27. The tech specialist also expects investments to go higher.
“Unknown how fast these AI products scale which creates an unknown for their CapEx forecast next year,” he said.
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During the earnings call, it became apparent that Mark Zuckerberg, CEO of Meta, is in a battle with Apple, Inc. AAPL over metaverse and spatial computing, Munster said. He added that certain limitations imposed by Apple have impacted Meta’s business, prompting Zuckerberg to aim for shaping the next-generation hardware products.
Wedbush analyst Daniel Ives praised Zuckerberg’s comeback, likening it to a “Rocky Balboa” story.
“Rocky Balboa-like comeback for Zuckerberg … back was against the wall and delivered,” the tech analyst said. He also called the results “super impressive in a choppy macro.”
Twitter's Pain Is Meta's Gain? Meanwhile, Future Fund analyst Gary Black attributed Meta’s strong performance to robust advertising growth. He noted that the company’s guidance reflects a 15-24% year-over-year increase, and this acceleration could potentially be attributed to Twitter’s ad revenue decline.
“Some acceleration [is] likely coming from TWTR ad $ declines,” Black said, tagging X CEO Linda Yaccarino.
Meta surged up 6.89% to $319.15 in after-hours trading on Wednesday, according to Benzinga Pro data.
Read Next: Trading Strategies for Meta Platforms Stock Before And After Q2 Earnings
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