Instagram owner Meta reports solid Q3 earnings; stock lower on capex uncertainty
Meta Platforms Inc (NASDAQ:META) unveiled better-than-expected third-quarter earnings and revenue on Wednesday, fueled by strong growth in ad impressions and pricing. Jefferies analyst Brian Thill said the company delivered a revenue beat despite “high expectations.”
However, the uncertainty around capital expenditure (capex) in fiscal 2025 sent shares down around 2.5% Thursday.
The social media giant posted adjusted earnings per share of $6.03, surpassing analyst estimates of $5.21. Revenue for the quarter came in at $40.59 billion, up 19% YoY and above the consensus estimate of $40.18 billion.
Ad impressions across Meta’s family of apps increased by 7% YoY, while the average price per ad rose 11%.
“We had a good quarter driven by AI progress across our apps and business,” said Mark Zuckerberg, Meta founder and CEO. “We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses.”
For the fourth quarter, Meta expects revenue to be in the range of $45-48 billion, compared to the analyst consensus of $46.09 billion. The midpoint of this guidance range is slightly above current estimates, suggesting continued growth momentum.
The company’s family daily active people (DAP) metric reached 3.29 billion on average for September 2024, representing a 5% increase YoY. Meta also reported strong free cash flow of $15.52 billion for the quarter.
Meta reiterated “significant growth” in 2025 capex driving infrastructure expenses, but below Q4 levels.
Analysts at Oppenheimer reiterated an Outperform rating on Meta shares and lifted their price target to $650 from $615, citing higher price-to-earnings (PE). They highlight that stronger Q3 revenue was driven “by both impressions and pricing, as AI driving increased engagement and better conversion for advertisers.”
“Zuckerberg’s comments were shorter than in recent calls, though he continues to see a significant roadmap ahead driving investment,” they added.
Meanwhile, a Roth MKM analyst urged clients to buy Meta stock “on weakness,” referring to the after-hours price drop. The firm lifted its price target from $620 to $635.
“META’s AI investments are providing returns via improved monetization, targeting, engagement leading to material market share gains,” analyst Rohit Kulkarni noted.
“Until there’s a consensus around 2025 growth to profitability algorithm, we see shares hovering around +/- 10% current after-hours levels,” he added.
Senad Karaahmetovic contributed to this report.