2022 has been a bit of a 'back to the future' year for the Meta Platforms Inc (NASDAQ: FB) stock price. Meta, the US company formerly known as Facebook, has seen its share price almost halved over 2022 so far. This morning (our time), the company closed at US$174.95 a share after hitting a new 52-week low of US$169 in last night's trading. That is the lowest share price Meta has had in front of it since the COVID crash of 2020.
But the company's after-hours pricing tells a markedly different tale. During after-market trading, Meta shares ended up closing substantially higher at US$207.09 a share. That's a good 18.37% above its closing price.
So what could have caused such a dramatic re-evaluation of Meta stock from the market?
Well, the company's earnings report, of course. Meta reported its results for the three months to 31 March 2022 after normal US market trading closed this morning.
Meta stock price jumps on earnings report
In these results, Meta reported an increase in daily active users to 1.96 billion, an increase of 31 million over the quarter and 4% year-over-year. Monthly active users also rose, by 3% to 2.94 billion. In terms of revenue, the company announced revenues of US$27.9 billion, a year-over-year rise of 6.6%.
But Meta also revealed a rise in total costs and expenses of 31% to US$19.38 billion. This was driven in part by an increase in staff headcount to 77,805, up 29% year-over-year.
Diluted earnings per share (EPS) fell over the quarter. Meta reported EPS of US$2.72 per share, down 18% from US$3.30.
Meta chief financial officer Sheryl Sandberg added the following:
We expect second quarter 2022 total revenue to be in the range of $28-30 billion. This outlook reflects a continuation of the trends impacting revenue growth in the first quarter, including softness in the back half of the first quarter that coincided with the war in Ukraine…
We expect 2022 total expenses to be in the range of $87-92 billion, lowered from our prior outlook of $90-95 billion. We expect 2022 expense growth to be driven primarily by the Family of Apps segment, followed by Reality Labs.
Why did the markets have this reaction?
So it's clear that investors found a lot to be excited about in this earnings report, judging by the enthusiastic after-hours share price reaction. Here's some of what eToro analyst Josh Gilbert had to say on Meta's earnings and the market's reaction:
It was a mixed quarter for Meta, as the social media giant missed revenue expectations, but saw a return in daily user growth after declining in the previous quarter. It was a better than feared result for Meta's investors.
Meta's daily active users jumped to 1.96 billion, up 31 million from the last quarter and beating expectations of 1.94 billion. This metric has helped ease concerns, at least for now, that Facebook was losing steam and that the platform had 'peaked'.
The company's advertising revenue experienced the slowest growth year-on-year for over a decade at just 6 per cent. This was, in part, thanks to Apple's iOS changes that have restricted Meta's ability to offer targeted ads. This is going to be a lingering issue for Meta, as it could potentially cost the company upwards of USD$10 billion in 2022…
At the current Meta stock price, this US tech giant has a market capitalisation of US$474.91 billion.
