The acceleration in Q1 revenue growth to 27 per cent y/y is likely being overshadowed by the implied Q2 revenue growth deceleration to 18 per cent y/y at the mid point below consensus 20 per cent and increases in the FY24 total expense and capex outlooks. However, we believe in META's successful track record of generating meaningful returns from prior investment cycles.
Meta reported impressive earnings for the first quarter, with revenue climbing 27 per cent to reach $36.46 billion. Net income more than doubled to $12.37 billion, primarily driven by decreased sales and marketing expenses.
Advertising revenue, Meta's primary income source, increased by 27 per cent in Q1, reaching $35.64 billion. Factors contributing to growth included a stabilizing economy and higher spending from Chinese retailers like Temu and Shein.
Analysts express concerns about a potential future impact of reduced Chinese advertising spending on Meta's growth. This highlights a key risk for Meta's revenue streams going forward.
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