Meta's earnings report comes as 'Magnificent Seven' stock looks to return to all-time high

Published Wed, Apr 24 20241:44 PM EDTUpdated Wed, Apr 24 20242:36 PM EDT

Meta Platforms is set to report first-quarter earnings after Wednesday's closing bell, the latest in a salvo of releases from technology names. The Facebook parent has surged along with fellow big technology peers, climbing about 40% in 2024 after soaring nearly 200% the prior year. Meta has also been able to sidestep the current market pullback, advancing more than 2% in April despite the Nasdaq Composite sliding more than 4%. Those moves come as Meta focuses on efficiency and expands beyond social media into alternative reality and artificial intelligence technology. The "Magnificent Seven" stock is currently trading about 6% below an all-time high it hit earlier in April as traders get ready for the latest news. Here's what investors should know ahead of the release: How the stock moved last time Meta's fourth-quarter earnings, released in early February, prompted a major rally. The tech giant topped expectations on both lines and issued strong guidance for the first quarter. Meta also initiated a quarterly dividend of 50 cents and approved a $50 billion stock buyback. The stock price surged more than 20% — which equates to more than $80 per share — in the session following the print. By percentage move, that goes down in history as Meta's third-best daily performance ever. Historically, Meta tends to do well on the back of its earnings. The company has surpassed Wall Street forecasts about 87% of the time , according to Bespoke Investment Group, and the stock gains an average of 2.3% on earnings days. What the Street expects For the first quarter, analysts polled by LSEG forecast $4.32 in earnings per share and $36.16 billion in revenue. The expected 26% rise in revenue year over year, combined with the company's cost-cutting measures, has resulted in a huge earnings boost. More broadly, analysts tend to like the stock. The majority of those polled by LSEG have buy ratings, with a price target implying that shares can climb over 8% in the next year. Given the strong stock performance and most recent earnings report, Rohit Kulkarni, Roth MKM managing director, is now wondering if CEO Mark Zuckerberg can "pull another bunny" out of his hat. Kulkarni said he is "marginally cautious" ahead of the release given tougher comparable figures and as concerns tied to European regulations swirl. "We believe a pathway towards mid-teens 4Q revenue growth and > $25 EPS in 2025 could help shares return to early April levels, and make new all-time highs," Kulkarni wrote to clients. "However, we aren't certain that we get clarity into such a potential outcome this week." Key data Beyond the headline figures, analysts will monitor several smaller data points for insights into the health of the company. As a social media platform operator, they'll look at the total number of active users on a daily basis and minutes per active user. If these are trending upward, it can indicate higher engagement with Meta-owned apps like Facebook and Instagram. Average revenue per user is another important metric, as it can show how much each active user contributes in terms of profit. Some analysts also told clients they'll be monitoring guidance around full-year capital expenditure spending.