Meta, formally known as Facebook, is reporting its Q1 ’22 earnings on April 27th, and it’s certainly a report you’ll want to watch closely, given how the stock reacted after its Q4 ’22 earnings report. Heavy losses for its metaverse platform and decreasing Facebook daily active users (DAUs) resulted in its share price plummeting a substantial 26.37% after its earnings release. Will its upcoming earnings report cause a similar sell-off, or can strong earnings help reinvigorate interest in the stock? This article will look at three key things to look for in Meta’s Q1 ’22 earnings and how they may impact the stock.
EPS and Revenue Expectations
According to Investing.com, the consensus EPS forecast for the quarter is $2.57, down 22.12% from the reported EPS for the same quarter last year. Analysts forecast revenue of $28.42 billion for the quarter, up 8.60% from the reported revenue for the same quarter last year. Whether the company can meet analysts’ expectations is uncertain, given that cost inflation and supply chain disruptions could cause advertisers’ budgets to decrease.
Meta’s Daily Active Users (DAUs)
One of the key metrics for Meta’s upcoming earnings is whether it records an increase or decrease in its Daily Active Users (DAUs). Its Q4 ’22 earnings report showed that Facebook’s daily users fell from 1.930bn in Q3 ‘22 to 1.929bn in Q4 ‘22. This is the first time in the company’s history that it recorded a decline in users. Rival platforms like Youtube and TikTok are likely a reason behind this decline, as they claw away some of Facebook’s younger user base. If Meta does report another decrease in its user base, it could spell trouble for its share price.
Metaverse Spending
In its fourth-quarter 2021 report, Meta revealed that its metaverse business, Reality Labs, reported a net loss of $10.19 billion for 2021. Losses are expected to worsen before they get better, with Meta’s CFO stating he expects “operating losses to increase meaningfully in 2022.”
It seems Meta believes investing heavily in its metaverse business is the way to recapture its younger user base. However, investors are understandably concerned about whether this huge bet will pay off. Its upcoming report should reveal further insight into how metaverse spending is progressing. Its upcoming report should provide investors with a deeper insight into how its metaverse platform is progressing.
Should you Trade Meta’s Q1 ’22 Earnings?
Meta’s Q1 earnings report is likely to create share price volatility and could present an ideal trading opportunity to profit. If you’re ready to trade its earnings, make sure you trade with a broker that offers superior trading conditions and robust risk management tools like easyMarkets. With easyMarkets web or app platform, you can access tight fixed spreads, zero slippage, and guaranteed stop loss and take profit.