6/30/2023 0 Comments Meta stock price forecast 2025![]() ![]() So the deceleration in revenue growth is not as bad as it looks. Meta Ad Revenue Growth Year-on-Year (Ex-Currency) - Stacked However, each quarter's year-on-year growth is also influenced by the growth rate the year before, and Q1 and Q2 2022 both have strong prior-year comparables, with Q2 2021's growth being close to 10 ppt higher than Q1's: Assume same growth rate for total and ad revenues in Q2 2022. Source: Meta earnings releases Librarian Capital estimates. Meta Ad Revenue Growth Year-on-Year (Ex-Currency) On the surface, Meta's ad revenue growth rates in Q1 and Q2 2022 represent the continuation of a down trend since Q2 2021: Growth Deceleration Not As Bad As It Looks However, Q1 2022 results contained evidence that Meta's strategy is on track, and that its earnings growth will resume soon. Prior Periods)įB guided to Q2 2022 total revenues of $28-$30bn, flat-ish sequentially and down 0.3% year-on-year (the latter after a 3 ppt currency headwind). Meta Revenues & EBIT by Segment (Q1 2022 vs. However, EBIT at Meta's core Family of Apps segment only fell 13.0%, whereas the small Reality Labs segment saw its Operating Loss expanded 62.0%, after costs rose 54.8% as FB continued to raise its Metaverse investments during the quarter: The EBIT decline in Q1 2022 was disappointing. EPS fell 17.4%, with the decline mitigated by a 4.9% reduction in the share count after buybacks:Ĭomparisons with Q4 2021 are not valid as Q4 included the holiday season. Cost & Expenses grew much more, by 31.0%, which meant EBIT was 25.1% lower. Meta's ad revenues grew 9.6% year-on-year in Q1 2022 including currency headwinds, total revenues grew 6.6%. Growth did indeed slow in Q1, and will remain low in Q2, but Q1 results provide evidence that Meta will resume its long-term earnings growth. Meta's share price collapsed 26% the day after Q4 2021 results in February, after management guided to much lower ad revenue growth (3-11%) in Q1 2022, and warned about the impact of competition from TikTok and anti-tracking changes in Apple's ( AAPL) iOS mobile platform. This helped Meta grow its ad revenues by 21.6% in 2020 and 34.6% in 2021, and its Adjusted EPS by 14.4% and 36.4%, respectively. The pandemic has accelerated Meta's business, with consumers spending more time on social media and businesses needing to attract customers in new ways. EBIT margins should be higher in the long run, as Meta is a platform business with natural operational leverage.Revenue per ad is underpinned by the unique value of Meta ads, superior to other media ad price also tends to grow faster than GDP.The number of ads per user will continue to grow thanks to the same new features and services.The number of users will continue to grow globally thanks to newer geographies and Meta continuing to offer new features and services.Meta Revenues Growth by Component (2012-21) The number of users, the number of ads per user, and the revenue per ad for the Meta Platforms app family should all grow over time.Our investment case has been based on the belief Meta will grow its EPS sustainably at a double-digit percentage CAGR long-term, due to: Our forecasts indicate an exit price of nearly $500 and a total return of 240% (26.9% annualized) by 2025 year-end. ![]() We expect EPS to shrink 17.5% in 2022, but to return to low-teens growth thereafter. Share Price (Last 1 Year)įB shares are at 14.4x 2021 EPS. Librarian Capital's FB Rating History vs. Even with yesterday's rebound, Meta stock remains 46% below its September 2021 peak, and is down 31% over the past year (though still up 21% since our initiation): We initiated our Buy rating on Meta in March 2019. In addition, expense growth is slowing and CEO Mark Zuckerberg explicitly committed to growing Meta's earnings over the next several years despite Metaverse investments. Impressions growth was strong, user numbers rose, and management continues to expect revenue growth to reaccelerate in H2. Investors were encouraged by evidence that FB's strategy is working. Shares rose 18.4% aftermarket to $207.09. ( FB) (formerly Facebook) reported Q1 2022 results overnight (Wednesday, April 27). Fritz Jorgensen/iStock Editorial via Getty Images Introduction Why is FB Stock Up? ![]()
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