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Can Meta stock reach $400 after Q4 earnings?

Can Meta stock reach $400 after Q4 earnings?

Social media giant Meta Platforms (NASDAQ: META) is scheduled to announce its fourth-quarter 2023 results on February 1, sparking anticipation about the report’s potential impact on the company’s future trajectory.

Meta expects total revenues ranging between $36.5 billion and $40 billion for the fourth quarter, with a predicted year-over-year top-line growth of approximately 2%. 

Ahead of the report, Meta’s stock has experienced short-term volatility, trading at $390.14 by press time, reflecting a decline of over 2% in the last 24 hours. In 2024, the stock has seen a 12% increase, riding on the overall rally observed among technology and communication services stocks.

META YTD stock. Source: Finbold

Chances of META reaching $400

It’s noteworthy that in 2024, Meta briefly tested the $400 mark, and the upcoming report presents several indicators that could guide the stock to a new rally. Notably, in Q3 2023, Meta Platforms reported a 23% year-over-year revenue growth, reaching $34.1 billion. 

The fourth-quarter revenue is expected to showcase the positive impact of Facebook’s expanding user base and the growing adoption of reels. Notably, the platform has recorded growth in recent quarters for Instagram, WhatsApp, Messenger, and Facebook, serving as pivotal elements driving the company’s business. Specifically, in Q3 2023, Meta’s daily and monthly usage of its suite of apps experienced a 7% year-over-year increase.

At the same time, in an era where artificial intelligence (AI) plays a crucial role in companies’ performance, investors will be keenly interested in understanding how Meta has continued to leverage the technology across various roles, particularly in sustaining user engagement. This approach aligns with the company’s focus on growing engagement and stabilizing user growth in various regions.

Attention will also be paid to ReelS, a feature that has become revenue-neutral, and the company is actively enhancing monetization strategies around the products. The feature is believed to have contributed to a more than 40% surge in time spent on Instagram since its introduction. Meta is further augmenting AI capabilities for advertisers, with Advantage+ shopping campaigns now achieving a $10 billion run rate.

Notably, in the third quarter of last year, Meta noted the heightened advertiser demand amid increasing regulatory scrutiny, especially from European authorities

Analysts offer META’s outlook

A consensus among 29 Wall Street analysts at TipRanks suggests that META will likely surpass the $400 mark in the next 12 months. The experts forecast an average price target of $426.11, with a high forecast of $470 and a low forecast of $370. In this case, the average price target represents an increase of about 9% from the current META price.

The analysts overwhelmingly recommend a ‘strong buy’ for META, with only two suggesting a ‘hold’ position.

META stock 12-month Wall Street analysts forecast. Source: TipRanks

Despite the optimistic outlook that points to the likelihood of Meta’s stock reaching $400, the upcoming results are anticipated to mirror various challenges, including the adverse effects of a demanding macroeconomic landscape and elevated inflation. These factors will likely add pressure on ad revenues in the upcoming reporting quarter.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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