back
Details Cookies
Hong Kong S.A.R
Cookie policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

Meta earnings: Greed trumps idealism Meta earnings: Greed trumps idealism Meta earnings: Greed trumps idealism

Meta earnings: Greed trumps idealism

Equities 5 minutes to read
PG
Peter Garnry

Head of Equity Strategy

Summary:  Investors very excited about Meta's Q4 earnings releases signalling much lower operating expenses and capital expenditures than previously guided providing the pathway to improved profitability throughout the year. At the same time the Q1 revenue guidance is suggesting that Meta's social media platforms are performing better in the current downturn in online advertising than its smaller competitor Snap. Meta shares were up 20% in extended trading hours last night.


Mark Zuckerberg has listened to shareholders

After the Q3 earnings release investors were furious expressing frustration with Mark Zuckerberg and the management team which did not appreciate the cost concerns of shareholders. The fallout was a shocking decline in the share price below $100. This likely created the much needed wake-up call for Meta which at that point was facing enormous internal pressures from employees seeing their stock options value vanish risking a potential brain-drain from the company.

Forget the headlines about Q4 revenue beat and EPS figures last night. What investors cared about was the cost signals from Meta guiding fiscal year operating expenses of $89-95bn down from previously guidance of $95bn-100bn. The capital expenditures outlook for the fiscal year was lowered to $30-33bn from previously $34-37bn. This move paves the road for a return of profitability and thus tailwind in earnings from now in the case the online advertising market also rebounds from current levels. If Meta can deliver on the “Year of Efficiency” then the narrative will dramatically change from now on. It is also clear from the revenue guidance for Q1 at $26-28.5bn vs est. $27.3bn is a better comparison with a year ago compared to what Snap announced two days ago. This is indicating that the Meta social media platforms are performing better in the current advertising downturn than the smaller platform Snapchat. Investors were excited about the signals from Meta sending its shares up 20% in extended trading.

Meta share price | Source: Saxo
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged foreign exchange trading); Type 4 Regulated Activity (Advising on securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.