What To Expect From Meta Platforms Stock In Q1?

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Meta Platforms

Meta Platforms (NASDAQ: META) is scheduled to report its fiscal Q1 2023 results on Wednesday, April 26, 2023. We expect the stock to beat the consensus estimates of earnings and revenues. The company outperformed the street estimates in the last quarter, despite a 4% y-o-y drop in the total revenues to $32.17 billion. The top line primarily suffered due to lower advertising revenues. Notably, the average revenue per user (ARPU) was down on a year-on-year basis. That said, the daily active users (DAU) improved in the quarter. We expect the Q1 result to be on similar lines.

Our forecast indicates that Meta Platforms’ valuation is $201 per share, which is 6% below the current market price of around $213. Our interactive dashboard analysis on Meta Platforms’ Earnings Preview has more details. 

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(1) Revenues expected to top the consensus

Meta Platforms’ revenues marginally reduced to $116.6 billion in FY 2022. The decrease was due to a slight drop in advertising revenues, which suffered because of tough macroeconomic conditions. The same was evident from the ARPU figure for the year – down 3% y-o-y. On the flip side, the DAUs increased by 4% y-o-y. We expect the Q1 results to follow the same trend. Overall, Meta Platforms’ revenues are estimated to touch $122.4 billion in FY2023.

Trefis estimates Meta Platforms’ fiscal Q1 2023 net revenues to be around $28.7 billion, 4% above the $27.6 billion consensus estimate. 

(2) EPS to beat the consensus estimates

Meta Platforms Q1 2023 adjusted earnings per share (EPS) is expected to be $2.09 per Trefis analysis, 3% above the consensus estimate of $2.03. The company’s adjusted net income decreased 41% y-o-y to $23.2 billion in FY 2022. It was due to lower revenues and a 23% rise in operating expenses. Notably, the expense figure mainly swelled due to a 43% increase in research & development costs. We expect the first-quarter results to be on similar lines. Overall, we estimate an annual GAAP EPS of around $9.23 in FY2023.

(3) Stock price estimate is 6% below the current market price

We arrive at Meta Platforms’ valuation, using an EPS estimate of around $9.23 and a P/E multiple of just below 22x in fiscal 2023. This translates into a price of $201, which is 6% less than the current market price. 

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year 

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 Returns Apr 2023
MTD [1]
YTD [1]
Total [2]
 META Return 0% 71% 85%
 S&P 500 Return 1% 8% 85%
 Trefis Multi-Strategy Portfolio 1% 9% 244%

[1] Month-to-date and year-to-date as of 4/25/2023
[2] Cumulative total returns since the end of 2016

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