Nasdaq 100: Meta’s share price and Q2 earnings results preview

Three key takeaways:

1. ​Investors have high hopes for Meta Platforms Inc’s (META) recently launched Threads app. Since it is the fastest growing app ever and gained in excess of 100 million subscribers within days, Threads has the potential to generate significant revenue for Meta as it competes with struggling Twitter.
2. ​Meta is also partnering with Microsoft and planning to launch a commercial version of its open source artificial intelligence language model, Llama 2 on Azure and Windows, further expanding its offerings. It will thereby provide a free alternative to expensive proprietary models sold by OpenAI and Google.
3. ​CEO Mark Zuckerberg’s vows of a “year of efficiency” in 2023, cancelling some of its data centre construction projects to save costs for a new design that is faster and cheaper, coupled with 25% staff layoffs, also point to higher revenue growth for the second quarter.

When are Meta’s results expected and what are the expectations?

​Meta Platforms is set to release its second quarter (Q2) 2023 results on 26 July 2023. The results are for the fiscal quarter ending June 2023.

​What is ‘The Street’s’ expectation for the Q2 2023 results?

​Wall Street’s expectations for the upcoming results are as follows:

• ​Revenue of $31,116 billion : +7.9% year on year (YoY)
• ​Earnings per share (EPS): $2.92 (+19% YoY)

​How to trade Meta’s results?

​Refinitiv data shows a consensus analyst rating of ‘buy’ for Meta – 18 strong buy, 31 buy, 6 hold but also 3 sell - with the median of estimates suggesting a long-term price target of $320.00 for the share, only around 1% higher than the current price (as of 20/07/2023).

​Looking closer at the numbers, Meta currently has a P/E ratio of 40.34 and a Forward P/E ratio of 25.73 which represents a premium compared to its industry's average Forward P/E of 21.89.

​IG sentiment data shows that 70% of clients with open positions on the share (as of 20 July 2023) expect the price to rise over the near term, while 30% of clients expect the price to fall.

​52% of clients who trade the share bought it this week while 51% of clients sold it this month.

​Meta share price – technical view

​Meta’s share price, which has risen by 153% year-to-date, continues its ascent but is fast approaching the 78.6% Fibonacci retracement of its 2021-to-2022 decline at $320.97. Around this level the share may short-term stall.

​If not, the late January 2022 high at $328.00 will be in focus, followed by the November and December 2021 highs at $352.71 to $353.83.

​Potential slips may find support around the psychological $300 mark and the $299.50 November 2021 low.

​While the 10 July low at $287.05 underpins on a daily chart closing basis, the short-term uptrend will remain intact.

​Summary

​Meta is set to release its Q2 2023 results on 26 July 2023.

​Q2 2023 results are expected to show a year-on-year (YoY) rise in revenue of around 7.9% and a near 19% rise in earnings per share (EPS).

​Revenue is expected to be boosted by the company’s highly successful new Threads app, the launch of a commercial version of its AI language model Llama 2 and significant cost cutting.

​Long-term broker consensus suggests the share to currently be a ‘buy’, with a median price target of $320.00.

​70% of IG’s clients with open positions are long the share but 51% sold it this month.

​The Meta share price remains in a bullish trend and has the November and December 2021 highs at $352.71 to $353.83 in its sights, even if it may short-term consolidate on the way.

​While the 10 July low at $287.05 underpins on a daily chart closing basis, the short-term uptrend will remain intact.