NEW: The Markets Divine Revival, Meta Soars After Annihilating Q2 Earnings...

It’s called a revival… look it up!

Investors are singing their off tune praises this morning after another thrilling showcase of price action yesterday. As Jerome Powell gloriously stood upon his beautifully carved, blue shaded podium hinting at rate cuts as soon as September, the markets, specifically tech, saw a revival more divine than my Aunt’s homemade green bean casserole during Sunday dinner. 

(Source: Giphy) 

The tech-induced Nasdaq led the charge rallying +2.6%, as the S&P 500 and Dow followed suit with upticks of +1.5% and +0.2%. The Russell 2000 also joined the Wednesday resurgence with a modest +0.5% close. 

Of course, going into today’s trading session, we’ll see if the bullish sentiment continues but again, it’s earnings season, and anything can happen during earnings season. 

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However, while most investors were left feeling somewhat uneasy after Microsoft’s “meh” earnings that revealed it’s disappointing AI growth in Azure revenue and cloud services - all seems to be forgotten this morning as Meta came in with some flawless numbers that showed just how lucrative Zuck’s love of stealing all of our data really is. 

(Source: Yahoo Finance) 

In short, Meta’s numbers were as juicy as a summer watermelon yesterday as Meta’s revenue beat analysts expectations of $38.31 billion by hitting $39.07 billion, a whopping 22% year over year increase. For earnings per share, analysts were hoping for a $4.76 estimate but got $5.16 from Meta instead, resulting in a nice 8.4% beat. 

But what about the real money maker you ask? Ad impressions for Meta rose 10% year over year, and get this - price per impression increased 6% quarter over quarter, marking its fastest growth in over three years.

(Source: Market Watch) 

Now of course, if that wasn’t enough for all the lizard investors to throw their life savings into Zuck’s tech conglomerate, Meta's guidance for Q3 revenue also came in at $39.75 billion, which is 1.5% above what analysts were predicting. Overachieving much?

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These numbers had analysts and investors picking their jaws off the floor as Meta is obviously following the same path as Zuckerberg’s fashion glow-up. Sure he may have ditched the hoodie for a more "NFT investor in 2021" vibe, but he's still the same guy who built an empire out of poking people on Facebook - and right now, the tech CEO is riding high. 

(Source: Daily Mail) 

However, given the impressive showing, it’s still not all sunshine and giggles for Meta. Reality Labs, a.k.a. Zuck's Metaverse playground lost $4.5 billion last quarter. But let’s be honest, does Zuck really care? Probably not. He's got bigger fish to fry, like making Meta AI the most used AI assistant in the world by the end of the year. Which is bold, but hey, it’s Zuck we’re talking about. With his, Essilor Luxottica, backed Meta x Ray Ban glasses gaining more momentum by the day, and Zucks’ open-source approach to AI development, Meta is definitely setting itself apart from the competition.

Which is why the main question that Meta investors are asking themselves this morning is: Is it time to buy? 

(Source: Seeking Alpha) 

Well in addition to the 22% YoY increase in revenue, and the resurgence of young adults on Facebook (shocker), Meta’s valuation is currently at 23 times this year’s earnings. Analysts expect EPS to rise by 35% this year and 14% next year. 

Compare that to its historical norms, and Meta is still looking like a bargain. If Meta traded up to the industry average P/E ratio, shares could hit around $600, implying an 18% upside. 

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But again, even the valuation isn’t without its negatives. The Metaverse is still a money pit, and $4.5 billion in losses is nothing to sneeze at. Plus in addition to Meta’s overall costs rising to 7%, thanks to Zucks’ all out AI fight with Google and Microsoft - the heavy reliance on ad revenue (as 98% of Meta's revenue comes from ads) is concerning. Meaning if digital ad spending takes a hit, so does Meta. 

(Source: Yahoo Finance) 

On the other hand, if investors think Zuck's vision is clearer than his AI glasses, and they aren’t scared of a few billion in Metaverse losses (pocket change, right?), then this may be the cue to get in. 

As Meta crushed it this quarter, with the stock responding immediately to a 7% rally overnight, Meta is no doubt looking good right now. Sure, there are risks— but with more AI on the horizon and ad revenue still flowing like a river, the potential rewards seem to outweigh any cons investors may have in the back of their mind. 

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But again, as always, do your due diligence to see if this is the right play for you. I’m just a writer giving you the facts, not an overpriced financial advisor. So please do your research to see if Meta is right for you. 

In the meantime, keep an eye out for Meta, and watch out for Amazon, and Apple's earnings after the bell. Things could get wild! 

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Stocks.News holds positions in Meta, Microsoft, Google, and Apple as mentioned in the article.