​​US earnings forecasts: Meta Q3 results preview

Get the latest insights on Meta's Q3 2023 earnings expectations, set to be released on 26 October. Explore the technology giant's revenue projections, AI initiatives, and dominance in the social media advertising market.

Meta's Q3 2023 earnings: what does 'The Street' expect?

A consensus of estimates from Refinitiv outlines the following expectations for Meta's Q3 2023 results, due on Thursday, October 26, 2023 at 7 am AEDT:

• Revenue: $33.566 billion (up 21.11% year-on-year)
• Earnings Per Share (EPS): $3.63 (up 221.34% year-on-year)

The broader technology sector in Q3 2023

The technology sector has experienced robust growth in Q3 2023, driven by favourable macroeconomic conditions, reduced inflation, and the widespread adoption of AI and machine learning. However, enthusiasm for AI has somewhat waned due to the hawkish stance of the US Federal Reserve (Fed).

Trends driving the tech sector

The technology sector has benefited from the ongoing digitalisation trend. Factors such as cloud computing, big data, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain, and 5G technology have all contributed to its growth. Increased investment in software, IT services, and communications services has further boosted the sector.

Several technology companies, including Meta, are set to release their earnings results in the coming weeks. Many are expected to exceed earnings estimates, thanks to their strong product portfolios and the growing utilisation of AI.

Meta's dominance in social media

Meta Platforms dominates the social media landscape with its suite of apps, including Facebook, Instagram, WhatsApp, and the newly launched Threads. The company primarily generates revenue by selling advertisements to brands targeting its extensive user base.

The future of social media advertising

According to Statista's Market Insights, ad spending on social media is projected to increase from $146 billion to $262 billion by 2028, representing a 79% growth over the next five years.

Meta Platforms is already a major player in the industry, and its dominance is expected to strengthen as competitors like X (formerly Twitter) grapple with advertiser concerns regarding content moderation, and as Snap sees its revenue growth stagnate, despite increasing its user base.

Leveraging AI for user engagement and advertising

Meta Platforms is also leveraging artificial intelligence to enhance user engagement and improve advertising capabilities. For instance, the company has developed photo-realistic chatbots modelled after celebrities, such as Kendall Jenner. Advertisers are also being provided with tools to create and optimise their ads more effectively.

Meta Platforms believes that these AI tools can save advertisers a significant amount of time and effort.

Long-term investment potential

With the combination of AI-driven engagement tools and a growing industry, Meta Platforms is well-positioned for long-term success. Analysts project that the company's earnings could grow by 21% annually in the coming years, making it an attractive investment opportunity.

How to trade the Meta Q3 2023 results

IG client sentiment

67% of IG clients with open positions on Meta (as of 18 October 2023) anticipate the share price to rise in the near term, while 33% expect the price to fall. Over the course of this week, 53% of clients sold the share, and month-to-date, 54% have done so.

IG client sentiment chart

Refinitiv data

Refinitiv data shows a consensus analyst rating of 'Buy' for Meta—19 Strong Buy, 32 Buy, 4 Hold, and 2 Sell—with the median of estimates suggesting a long-term price target of $375.00 for the share, approximately 16% higher than the current price (as of 18 October 2023).

Refinitiv chart

Meta technical analysis

Meta's share price, which has risen by 158% year-to-date, has regained around 80% of its decline from 2021 to 2022 and is nearing its July $326.20 peak. Once this is overcome on a weekly chart closing basis, the November and December 2021 highs at $352.71 to $353.83 will be in focus, ahead of the August 2021 peak at $384.33.

​Meta weekly chart

Last week, the Meta share price briefly reached a ten-month high at $330.54 before being pulled back down by general risk-off sentiment, with the Fed expected to maintain higher rates for a more extended period following higher-than-expected US Consumer Price Inflation (CPI).

Since then, the Meta share price has resumed its ascent and is aiming for last week's $330.54 high while it remains above its accelerated uptrend line (dashed line on the chart) at $317.40 on a daily chart closing basis.

The long-term uptrend will remain intact as long as the Meta share price stays above its $274.38 mid-August low. Support above this key level is along the 55-day Simple Moving Average (SMA) and the December-to-October uptrend line at $303.75 to $300.40. Further down lies the late September low at $286.79.

​Meta daily chart