Meta reported strong Q1 earnings, exceeding Wall Street's expectations in revenue and EPS, leading to a 4% stock price increase. The company raised its full-year capital expenditures forecast due to anticipated growth despite concerns over advertising revenue amid tariff uncertainties. Meta's limited exposure to cloud services and reliance on advertising in volatile markets have caused some analysts to express caution. Additionally, Meta faces legal pressures from the FTC regarding its acquisitions of Instagram and WhatsApp, which may involve significant financial settlements or operational changes.
"We attribute weakness to [Meta's] greater exposure to advertising (no cloud business for [Meta]) and China-based advertisers (>10% exposure for [Meta]) who have reportedly pulled back on ad spend."
"The FTC is looking to force Meta to sell off both Instagram and WhatsApp as a remedy. The commission claims Meta originally purchased the apps as part of a 'buy-or-bury' campaign to fight off potential competitors."
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