Meta releases mixed Q1 results! The stock price still soars despite the lowest revenue growth in 10 years

It is learned that Meta released a mixed 2022Q1 financial report. Although revenue achieved the lowest growth in 10 years, the increase in the number of active users still drove Meta's stock price up 13% in after-hours trading, and even rose by 19% in late trading. The following is a summary of the financial report:

• Total revenue increased 7% year-on-year to $27.91 billion, lower than analysts' expectations of $28.2 billion and the lowest revenue growth in 10 years;

• Advertising revenue was $26.998 billion, compared to $25.439 billion in the same period last year.

• Other business revenue was $215 million, compared with $198 million in the same period last year.

• Gross profit was $8.524 billion, down 25% from $11.378 billion in the same period last year;

• Profit margin was 31%, down from 43% in the same period last year;

• Net profit was $7.465 billion, down from $9.497 billion in the same period last year;

• Diluted earnings per share were $2.72, down 18% from $3.30 in the same period last year.

• Meta’s family of applications (including Meta, Instagram, WhatsApp, and Messenger) saw net revenues drop 13% year-over-year to $11.48 billion.

• The average daily active users of the Meta family were 2.87 billion, a year-on-year increase of 6%, and the number of monthly active users increased by 6% year-on-year to 3.64 billion;

• Facebook's daily active users were 1.96 billion, up 4% year-on-year, and its monthly active users were 2.94 billion, up 3% year-on-year, higher than analysts' expectations;

• Meta "family" ad impressions increased by 15% year-on-year, and the price of a single ad increased by 8% year-on-year;

• Repurchased $9.39 billion of Class A common stock in the first quarter.

Meta is rebranding its products and tweaking its business model. CEO Mark Zuckerberg announced that Meta will focus more on its virtual reality platform Metaverse instead of its core social media business.

Analysts warn that Meta's investment in virtual worlds is slow to pay off: RealityLabs, its virtual reality research and product development division, lost $2.96 billion in the first quarter, compared with a loss of $1.83 billion in the same period last year. Zuckerberg acknowledged this in a call with investors on April 27, noting that investments in virtual reality are different from past product launches because virtual reality includes hardware and has a higher threshold for profitability. It is currently seeking to expand its user base in the metaverse by offering a version of its virtual reality experience HorizonWorlds on computers this year, laying the foundation for 2030.

Earlier this month, Meta announced plans to monetize the Metaverse, but Publicis Sapient analyst Raj Shah said adoption of the initiative is still low and Meta must continue to invest to help attract developers and brands to its platform.

Like other social media companies, including Alphabet, Meta reported that TikTok, which competes with YouTube Shorts, has increased competition for Meta users and advertising revenue. TikTok's competitor, YouTube Shorts, generates 30 billion views a day, four times the number last year.

Meta's second-quarter guidance expects revenue of $28 billion to $30 billion, slightly lower than analysts' previous estimate of $30.6 billion, reflecting the adverse effects of factors including inflation and the Russia-Ukraine war on the entire technology industry.

Editor ✎Estella/

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