Meta Platforms’ 1Q earnings preview: What to expect

When does Meta Platforms report earnings?

Meta Platforms is set to release its quarter one (Q1) 2025 financial results on 30 April 2025 after US market closes.

Meta’s Q1 2025 revenue is expected to rise 13.6% year-on-year to US$41.4 billion, up from US$36.5 billion in the same period last year. However, this would represent a deceleration from the 20.6% growth recorded in Q4 2024.

Earnings per share (EPS) is projected to increase 12.2% year-over-year (YoY) to US$5.29, compared to US$4.71 a year earlier—its slowest EPS growth since Q1 2023.

Meta’s share price down 35% from its February 2025 peak

Economic and policy uncertainties stemming from US tariffs have put company valuations under renewed scrutiny, triggering a sharp unwinding in the Magnificent Seven stocks over the past two months. As such, Meta’s share price has fallen more than 35% from its February 2025 peak.

While its price-to-earnings (P/E) ratio still stands at 20.7—potentially high in the current environment—it remains below its three- and five-year historical averages, as tariff-driven concerns have eroded some of its valuation premium. During the upcoming earnings call, it will be important to assess whether management can effectively reassure investors that any upcoming growth slowdown is temporary.

Tariff impact on advertising spending in focus

Being a services-based provider, Meta may be somewhat insulated from the direct effects of US tariffs, but it remains exposed to their broader, indirect impact. Advertising remains Meta’s core revenue driver (96% of revenue), which is projected to slow to 13.3% year-on-year in Q1, down from 20.9% in Q4 2024.

With tariff-related uncertainties weighing on consumer and business sentiments, advertising budgets could face pressure—particularly from Chinese retailers like Temu and Shein. These firms may find it increasingly unviable to target US consumers due to steep tariff rates and the end of the de minimis rule—which previously exempts low-value imports from customs duties. Investors will be monitoring for signs of resilience, especially around whether AI-driven value and higher ad pricing can offset the potential fall-off in advertising demand.

Return on hefty capital investments remains under scrutiny

Meta delivered strong performance in Q4 2024, with daily active users surging 58.8% to 3.35 billion and average revenue per user (ARPU) climbing 8.6% to US$14.25—an encouraging sign that its substantial capital expenditures are yielding returns to a promising degree.

Looking ahead to Q1 2025, growth may be modest, with projections pointing to a 9.5% increase in ARPU and a 4.4% rise in daily active users, underpinned by continued investments in AI and advertising infrastructure.

With Meta reaffirming plans to spend between $60 billion and $65 billion in capital expenditures for 2025 to advance its AI ambitions, investors will be watching these core metrics closely to assess whether such aggressive spending is translating into sustainable growth. Attention will also turn to how much additional investment may be required to maintain momentum in AI development, and whether an uncertain economic environment could alter Meta’s capex trajectory.

Margins on watch amid layoffs

During the quarter, Meta has implemented cost-cutting measures, including layoffs, to streamline operations and enhance efficiency. These layoffs follow similar reductions in 2022 and 2023, with investors likely to monitor whether further rounds of cuts are imminent.

In the near term, margins are expected to decline to 32.5%, down from 43.1%, before stabilising in subsequent quarters. Given the slowing macroeconomic growth outlook, efficiency remains a key focus. Investors will be closely watching how management’s strategy of deprioritising non-strategic areas, such as hardware and select Reality Labs projects, while prioritising AI-powered tools, could help protect margins.

Technical Analysis – Awaiting clearer signals for trend reversal

Meta’s share price continues to exhibit a broader downward trend for now, marked by a consistent pattern of lower highs and lower lows. The daily relative strength index (RSI) has also struggled to break above its midline on three separate attempts.

Looking ahead, a stronger case for a trend reversal would likely require a decisive breakout above the key trendline resistance near the US$540.00 mark. Such a move could pave the way for a retest of the critical 200-day moving average, with a reclaim of the key trendline offering a more compelling confirmation of a shift in trend.