Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, experienced a decline in stock price of about 3% following the release of its third-quarter earnings report. Despite this decline, Meta exceeded analyst expectations for advertising revenue, indicating a continued rebound in the digital advertising market.
Investors were pleased with Meta’s guidance on expenses for 2023 and 2024, as it demonstrated the company’s ability to balance cost-cutting efforts while investing in the metaverse and artificial intelligence. However, the soft guidance for fourth-quarter revenue, potentially influenced by the Israel-Gaza war, may have contributed to the sell-off in the stock.
Analysts view the decline in Meta stock as a buying opportunity. William Blair analyst Ralph Schackart commended Meta’s work in artificial intelligence, particularly its advancements in driving engagement across the organization. Meta’s AI-driven feed recommendations have resulted in a 7% increase in time spent on Facebook and a 6% increase on Instagram. Meta’s AI tools for advertisers, including Advantage Plus shopping campaigns, are also showing significant growth.
Goldman Sachs analyst Eric Sheridan noted Meta’s solid revenue growth, driven by new product initiatives, strong engagement, and contributions from Asia-based eCommerce. Sheridan praised Meta’s ability to maintain cost-efficiency while investing in artificial intelligence. JPMorgan analyst Doug Anmuth emphasized Meta’s focus on operating discipline and expense guidance for 2023 and 2024. Anmuth believes that Meta’s execution and discipline make it an attractive investment opportunity.
Overall, Wall Street analysts see the decline in Meta stock as a temporary setback and recommend buying the dip. The positive momentum in Meta’s key product initiatives and its commitment to operating discipline position the company for long-term growth. Analysts from William Blair, Goldman Sachs, and JPMorgan have issued positive ratings and raised their price targets for Meta, indicating potential upside for investors.
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