Meta reports Q3 earnings after market close today. Revenue was $34.15B vs. $33.56B expected. EPS was $4.39 vs. $33.56 expected. Q3 revenue grew 23% YoY and expenses actually declined 7%(!!) due to the 22% headcount reduction YoY. Their current operating margin is 40%. Given that Reality Labs Operating Losses were $3.75B for Q3, the 40% operating margin is super impressive.
Meta’s ad impressions grew 31% YoY but the CPM only declined 6% so it’s good. In Zuck’s prepared remarks, he mentioned that business messaging is doing really well and they are using AI everywhere, which is going to be the most heavily invested area for Meta in 2024. It appears that they are able to overcome some of the signal loss from the Apple privacy changes and grow revenue substantially again.
Overall, it was a great quarter for Meta. But for some reason, the stock fell 3% after hours after falling 4% during today’s trading session. The same thing happened to Google too. Google’s earnings were pretty good but GOOGL 0.00%↑ stock tanked 9.5% today. Well, it’s hard to attribute reasons for why stocks go up or down on a daily basis. But if Google and Meta have had bad earnings, their stocks would have tanked even harder.
As someone that is very bearish tech share prices, Meta had a good quarter and by estimates is trading at a reasonable 16x fcf 2024 on flat revenue and 14.6 on top line. This is a 6-7% FCF yield. Which is above treasury
To me what is going on with the (not so) mag 7, is multiple compression on extremely fcf yields. Higher for longer, the upward move in treasury yield and 150B/month in QT is finally bringing them back down to earth.
It's important to remember that the market moves to higher highs and lower lows than it should, so the move down will likely shoot past fair multiples for mag 7.
Note:I also agree goog was ok. Msft was less good than Meta and trades at much higher multiples. If Meta is gonna sell off here, msft has about a 50% decline ahead of it to be at comparable multiples.
As someone that is very bearish tech share prices, Meta had a good quarter and by estimates is trading at a reasonable 16x fcf 2024 on flat revenue and 14.6 on top line. This is a 6-7% FCF yield. Which is above treasury
To me what is going on with the (not so) mag 7, is multiple compression on extremely fcf yields. Higher for longer, the upward move in treasury yield and 150B/month in QT is finally bringing them back down to earth.
It's important to remember that the market moves to higher highs and lower lows than it should, so the move down will likely shoot past fair multiples for mag 7.
Note:I also agree goog was ok. Msft was less good than Meta and trades at much higher multiples. If Meta is gonna sell off here, msft has about a 50% decline ahead of it to be at comparable multiples.