Meta Platforms (NASDAQ: META) is preparing to release its fourth-quarter earnings after the bell on Wednesday. EPS is expected to come in at $6.74, against revenue of $46.99 billion. Both figures would represent a significant increase of more than 10% on the previous quarter.
Meta's stock is down 3.4% in today's session, with the broader tech market being rocked by China's DeepSeek AI threatening perceived U.S dominance. Over the past 12 months, the stock remains a huge outperformer, with gains of more than 65%.
The enterprise value of Meta is 13 times its 2024 adjusted EBITDA projection. This valuation metric is essential for investors seeking to understand Meta's financial health and its potential value compared to earnings.
Meta's sales are projected to grow at a compound annual growth rate (CAGR) of 12% over the next five years. This growth is expected to be driven primarily by an increase in average revenue per user, supplemented by user growth. Furthermore, advertising sales are anticipated to show robust growth in North America and Europe, with a significant focus on enhancing ad monetization in regions such as Asia, Africa, and the Middle East.
Taking a look at recent earnings, and Meta has delivered strong growth, and beats in each of the previous three reports.
| Period | EPS (Actual $) | EPS (Expected $) | Revenue (Actual $B) | Revenue (Expected $B) |
|---|---|---|---|---|
| Dec '24 | – | 6.74 | – | 46.99 |
| Sep '24 | 5.30 | 6.03 | 40.43 | 40.59 |
| Jun '24 | 4.78 | 5.16 | 38.31 | 39.07 |
| Mar '24 | 4.36 | 4.71 | 36.22 | 36.46 |
| Dec '23 | 4.97 | 5.33 | 39.17 | 40.11 |
Meta holds a wide economic moat, largely attributed to its intangible assets and the network effects generated by its extensive family of apps. These include Facebook, Instagram, WhatsApp, and Messenger, which together contribute to substantial competitive advantages.
The consensus target price of $669.38 offers perceived potential upside from current price action, although there is likely to be plenty of volatility in the week ahead with the raft of earnings on deck, and the uncertainty surrounding DeepSeek's impact on U.S. tech yet to see a regular trading session play out.
Considering these factors, markets must weigh Meta's current valuation, growth prospects, and the potential risks when trying to foresee a path beyond earnings.
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