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​​US earnings forecasts: Meta Q3 results preview

​​Meta's Q3 2023 results are expected to show a year-over-year revenue increase of 21.11% and an EPS increase of 221.34%.

Meta Source: Bloomberg

​​​Meta results Q3 2023 earnings preview, what does ‘The Street’ expect?

​​A consensus of estimates from Refinitiv arrives at the following expectations for the third quarter (Q3) 2023 Meta results which are due on 25 October:

​Revenue $33.566bn (+21.11% y/y)

Earnings per share (EPS) of $3.63 (+221.34% y/y)

​The technology sector has experienced a strong Q3 in 2023, driven by favourable macroeconomic conditions, reduced inflation, and the widespread adoption of AI and machine learning. However, the enthusiasm surrounding AI has waned somewhat due to the hawkish stance of the US Federal Reserve (Fed).

​The technology sector has benefited from the ongoing digitalization trend, with cloud computing, big data, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain, and 5G technology all contributing to its growth. Increased spending in software, IT services, and communications services has also been a boon for the sector.

​Technology companies such as Meta are set to report their earnings results in the coming weeks, and many are expected to exceed earnings estimates due to their strong product portfolios and the growing usage of AI.

​Meta Platforms dominates the social media landscape with its app family, including Facebook, Instagram, WhatsApp, and the newly launched Threads. The company generates most of its revenue from selling ads to brands that target its vast user base.

​According to Statista's Market Insights, ad spending on social media is projected to increase from $146 billion to $262 billion by 2028, representing a 79% growth over the next five years. Meta Platforms is already a major player in the industry, and its dominance is expected to strengthen as competitors like X (formerly Twitter) grapple with advertiser concerns regarding content moderation and as Snap sees its revenue growth stagnate, despite increasing its user base.

​Meta Platforms is also leveraging artificial intelligence to enhance user engagement and improve advertising capabilities. For instance, the company has developed photo-realistic chatbots modelled after celebrities, such as Kendall Jenner. Advertisers are also being provided with tools to create and optimise their ads more effectively. Meta Platforms believes that these AI tools can save advertisers a significant amount of time and effort.

​With the combination of AI-driven engagement tools and a growing industry, Meta Platforms is well-positioned for long-term success. Analysts project that the company's earnings could grow by 21% annually in the coming years, making it an attractive investment opportunity.

​How to trade the Meta Q3 2023 results

​67% of IG clients with open positions on Meta (as of the 18 October 2023) expect the share price to rise in the near term, while 33% of IG clients with open positions on the company expect the price to fall. In the course of this week 53% of clients sold the share and month-to-date 54% have done so.

Meta sentiment chart Source: IG
Meta sentiment chart Source: IG

​Refinitiv data shows a consensus analyst rating of ‘buy’ for Meta – 19 strong buy, 32 buy, 4 hold and 2 sell - with the median of estimates suggesting a long-term price target of $375.00 for the share, roughly 16% higher than the current price (as of 18 October 2023).

Meta analysts Source: Refinitiv
Meta analysts Source: Refinitiv

​Technical analysis on the Meta share price

​Meta’s share price, which year-to-date has risen by 158%, has regained around 80% of its 2021-to-2022 decline and is flirting with its July $326.20 peak. Once overcome on a weekly chart closing basis, the November and December 2021 highs at $352.71 to $353.83 will be in focus, ahead of the August 2021 peak at $384.33.

​Meta Weekly Candlestick Chart

Meta Weekly Candlestick Chart Source: TradingView
Meta Weekly Candlestick Chart Source: TradingView

​Last week the Meta share price briefly made a ten-month high at $330.54 before being dragged back down again by general risk-off sentiment with the Fed expected to keep rates higher for longer following higher-than-expected US consumer price inflation (CPI).

​Since then the Meta share price resumed its ascent, though, and is gunning for last week’s $330.54 high while it remains above its accelerated uptrend line (dashed line on the chart) at $317.40 on a daily chart closing basis.

​Meta Daily Candlestick Chart

Meta Daily Candlestick Chart Source: TradingView
Meta Daily Candlestick Chart Source: TradingView

​The long-term uptrend will remain intact while the Meta share price stays above its $274.38 mid-August low. Support above this key level comes in along the 55-day simple moving average (SMA) and the December-to-October uptrend line at $303.75 to $300.40. Further down lies the late September low at $286.79.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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