In our preview of Meta's earnings, we laid out expectations...
- Revenue estimate $63.32 billion (Bloomberg Consensus)
- Advertising rev. estimate $61.82 billion
- Family of Apps revenue estimate $62.75 billion
- Reality Labs revenue estimate $517.7 million
- Other revenue estimate $1.1 billion
- Operating income estimate $20.28 billion
- Family of Apps operating income estimate $23.96 billion
- Reality Labs operating loss estimate $5.21 billion
- Operating margin estimate 32.5%
- EPS estimate $3.56
- Ad impressions estimate +12.3%
- Average price per ad estimate +11.2%
- Average Family service users per day estimate 3.66 billion
... and also sketched a setup of what to expect from earnings:
- expectations at 9/10,
- positioning at 8/10,
- Mag 7 exposure at a record,
- an implied move that Goldman calls cheap,
- a buyside bar for 2027 spending that's $50 billion above the Street,
- a product whose growth may already have peaked, and...
- an equity raise that the majority of the buyside expects as soon as the stock lets it.
Bloomberg points out that at 19x forward earnings, Meta is the second-cheapest Mag 7 stock after Nvidia. Well, it probably should be.
The bull case is that Zuckerberg beats, guides Q4 to $75 billion, drops a Muse DAU number (although with Claude just launching its own agents, it is about to get crowded) and keeps 2027 vague, and the stock grinds to $800 and the equity offering. The bear case is that he does all that and then says the words "notably larger" about 2027 capex. Judging by Meta's last two Q3 prints (-4% and -11% last October), and the last two prints overall (-9% and -8%), we know which one the tape has favored lat
