Meta Platforms, Inc. (NASDAQ: META) recently unveiled its third-quarter earnings, surpassing both revenue and earnings estimates. Meta’s core operations revolve around its suite of platforms like Facebook, Instagram, and WhatsApp. And those apps continue to carry the business, making up for losses in Reality Labs, the part of its business that’s focused on the metaverse.
The tech company reported Q3 earnings of $4.39 per share, exceeding Wall Street expectations of $3.63. And total revenue of $34.2 billion also beat analyst projections of $33.6 billion. This has happened even as the company’s Reality Labs business incurred an operating loss of $3.7 billion. The company recently unveiled its Quest 3 headset, indicating that Meta remains committed to growing its metaverse business despite the continual losses from the segment.
Meta’s overall surge in earnings this past quarter can be attributed to a rebound in ad revenue and the cost-cutting measures initiated under Mark Zuckerberg’s “year of efficiency.” The company also recorded a 31% year-over-year increase in ad impressions, surpassing the projected 29.6%.
However, not all the news was great. The stock would ultimately fall after earnings due to a soft Q4 guidance. Susan Li, Meta’s CFO, cited geopolitical tensions as a potential factor for a softening ad market, emphasizing the uncertainty and volatility that may be ahead in upcoming months.
There are also legal challenges, with 42 attorneys general targeting Facebook and Instagram for allegedly creating addictive features aimed at children. While Meta has defended its stance, these lawsuits could pose significant headwinds in the future.
Year to date, Meta’s stock is up around 147%. But with some challenges ahead, it could be running out of steam. Investors should be cautious before taking a chance on Meta as this has been a volatile stock in the past few years.