Meta Platforms Q1 Earnings Preview: Analyst Expects Weak Guidance, Will Company Continue Streak Of Revenue Beats?

Meta Platforms META could highlight its progress in artificial intelligence when it reports first-quarter financial results after market close Wednesday.

Here are the analyst earnings estimates, what experts are saying ahead of the report and key items to watch.

Earnings Estimates: Analysts expect Meta Platforms to report first-quarter revenue of $41.39 billion. That’s up from $36.45 billion, according to data from Benzinga Pro.

The social media and technology company has beaten analyst estimates for revenue in 10 straight quarters.

Analysts expect the company to report first-quarter earnings per share of $5.28, up from $4.71 in last year's first quarter. The company has beaten analyst estimates for earnings per share in eight straight quarters.

Previous guidance from the company calls for first-quarter revenue to be in a range of $39.5 billion to $41.8 billion.

Read Also: Meta Q1 Earnings On Deck: Expert Sees Growth At A ‘Reasonable Price’

What Experts Are Saying: With the potential of downward revisions to fiscal 2025 guidance for revenues, margins, EPS and free cash flow, Needham analyst Laura Martin recently reiterated an Underperform rating on Meta Platforms.

Martin said there is also concern that there could be upward revisions to capital expenditures and losses at the company's Reality Labs division. Her estimate for first-quarter revenue is $40.5 billion and earnings per share of $4.82. Both figures are below the analyst consensus estimates.

Meta CEO Mark Zuckerberg testified in the FTC antitrust trial that the amount of time people spend on Facebook and Instagram has "gone down meaningfully,” Martin recalled.

Freedom Capital Markets Chief Global Strategist Jay Woods said the key questions ahead of earnings revolve around advertising spending by Chinese companies, AI initiatives and their contribution to growth and how much time daily active users are spending on Meta's platforms.

"Meta shares are 26% below their 52-week highs and currently embroiled in litigation which has taken CEO Mark Zuckerberg away from his daily activities," Woods said.

Here are other recent analyst ratings on Meta Platforms and their price targets:

• Loop Capital: Maintained Buy rating, lowered price target from $900 to $695
• Stifel: Maintained Buy rating, lowered price target from $740 to $628
• Benchmark: Maintained Buy rating, lowered price target from $820 to $640
• Scotiabank: Maintained Sector Perform rating, lowered price target from $627 to $525
• Morgan Stanley: Maintained Overweight rating, lowered price target from $660 to $615

Key Items to Watch: Meta likely won't discuss its ongoing antitrust litigation. Still, commentary on growth or usage of Instagram and WhatsApp could provide key given these segments could be forced to be spun out from the company in the future.

In the fourth quarter, total revenue was up 21% year-over-year for the company. Investors and analysts will be looking for some of the positive momentum to continue in the first quarter in areas like daily active users, ad impressions and average price per ad.

With the macroeconomic environment and tariff concerns, there is the possibility that Meta Platforms saw lower advertising demand.

Costs and expenses will be another key topic with a recent report saying the company was laying off people from its Reality Labs division, on top of a large company-wide headcount reduction in February.

Progress with AI initiatives is likely to be a large focus from investors and analysts in the company commentary and during the earnings call.

"We continue to make good progress on AI, glasses and the future of social media. I'm excited to see these efforts scale further in 2025," Zuckerberg said after fourth-quarter results.  

On Tuesday, Meta hosted its first ever Gen-AI developer conference called LlamaCon. Among the highlights of the event was the introduction of AI assistant Meta AI, which could be a ChatGPT competitor with a standalone app.

"We're launching the first version of the Meta AI app: the assistant that gets to know your preferences, remembers context and is personalized to you," the company said.

Meta AI is being used across all Meta platforms. The launch of a standalone AI app will likely be a highlight for the company and could be a focus in Wednesday's commentary.

META Price Action: Meta Platforms stock is up 0.3% to $551.25 on Tuesday versus a 52-week trading range of $427.20 to $740.89. Meta stock is down 8.1% year-to-date and up 27.3% over the last year.

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