Meta Q2 - Shares up on great outlook

Meta Platforms (the company previously known as Facebook) had excellent results out last week, and the share price shot higher. It's now trading at around $325 per share, much closer to its all-time high of around $380 per share, and a far cry from its disastrously low price of $88 in October 2022.

In other words, it's enjoyed an incredible turnaround in the last nine months. Why?

Well, firstly CEO Mark Zuckerberg calmed down about the Metaverse and redirected capital spending and server resources to artificial intelligence (AI) projects. AI is used to improve the user experience on social media sites, especially on Facebook and Reels. Advertisers are also using AI-based ad management tools to automate, manage and hone their campaigns.

For the record, Zuckerberg still thinks that work on AR/VR technology is "on track" and he plans to beat Apple and sell the default headset/goggles/glasses that will achieve mass adoption in the 2030s (his forecast).

Secondly, Meta's social media platforms enjoyed good growth, and solid support from advertisers. Their whole group has 3.9 billion monthly users, on average, per month. That's literally half the world's population, using either Facebook, Messenger, Instagram, WhatsApp or Threads.

Thirdly, Meta is being more disciplined about costs, so their profit margins have improved dramatically. For the rest of 2023, their revenue estimate was a robust 6.8% ahead of consensus. For the full year, they lowered their capital expenditure guidance by 9.5%. Headcount has fallen 14%.

We like Meta, and think it has a place in your portfolio.