Meta Platforms, the parent company overseeing social media giants Facebook and Instagram, has announced better-than-expected financial results for the third quarter of 2023. The company reported earnings per share (EPS) of $4.39, surpassing Refinitiv analysts’ estimates of $3.63. Moreover, Meta’s Q3 revenue reached $34.15 billion, outperforming analysts’ predictions, which had set revenue expectations at $33.56 billion. This quarter’s revenue growth of 23% marks the fastest expansion rate seen since 2021.
The social media conglomerate also reported robust user statistics. Daily active users (DAUs) numbered 2.09 billion, exceeding the forecast of 2.07 billion. Meanwhile, monthly active users (MAUs) stood at 3.05 billion, consistent with the anticipated 3.05 billion. Notably, the average revenue per user (ARPU) reached $11.23, surpassing the consensus estimate of $11.05.
Initially, Meta’s stock prices surged in after-hours trading on the New York Stock Exchange following the release of these impressive financial results. However, shares later experienced a decline of over 3% as Chief Financial Officer Susan Lee expressed a cautious outlook for the company’s fourth-quarter earnings. Lee cited concerns related to ongoing conflicts in the Middle East, primarily the war between Israel and Hamas, which have created uncertainty in the region.
Lee emphasized that online commerce plays a pivotal role in Meta’s advertising revenue growth, followed by products for daily consumption and gaming. However, the unpredictability of the Middle East situation has led Meta to widen its fourth-quarter earnings forecast. The company now anticipates Q4 revenue to fall within the range of $36.5 billion to $40 billion, while analysts’ expectations had been set at $38.85 billion.
Furthermore, Meta’s Reality Labs business division, established to support Metaverse products, reported an operating loss of $3.74 billion in the third quarter. It is expected that businesses within this division will continue to face substantial operating losses.
While Meta’s strong Q3 performance is a testament to its advertising and user engagement strategies, concerns about potential impacts from geopolitical conflicts in the Middle East raise questions about the company’s financial outlook for the final quarter of the year. The situation remains dynamic, and Meta will closely monitor its ramifications on the business landscape.