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Meta- A beacon of light

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Shares of the social media giant rose sharply in the after-hours trading, driven by a strong set of earnings result that is much better than expected. Investors rally behind the company as growth remains on track despite a recent massive cost-cutting measure.

Revenue exceeded expectations of $27.7 billion to hit $28.65 billion. Also, earnings per share reached $2.20, ahead of estimates of $2.02. Guidance was also beautiful, expected to be around $29.5 billion to $32 billion, ahead of the estimated $29.5 billion.

A prudent spending structure makes way.

In recent months, we have seen huge cuts and cost-saving measures, which make investors enthusiastic about its future prospect. Mark Zuckerberg shifted the company’s gear towards better margins and heightened profitability.

The spending outlook is cut to around $86 billion to $90 billion. It maintained capital expense guidance from $30 billion to $33 billion.

Remarkable performance in share price

Meta has seen its stock price soar by more than 70% this year. Optimism is gaining traction as the company announced 11,000 job cuts last November and the recent 10,000 job cuts during its December quarter earnings.

Despite the looming negative macro outlook, as long as the company is able to maintain good engagement metrics, it should continue to see meaningful performance in the stock price as Mizuho analyst maintained its buy rating on Meta stock with a price target of $235, not far from the after-hour mooning price.

What’s on the menu today?

It is going to be a critical data day.

At 8.30 pm. we will have the GDP data, which is expected to see growth falling to 2% from 2.6% based on QoQ basis.

Concurrently, the Initial Jobless Claims are also expected to climb from 245K to 248K. This will reflect recent weakness in the labour market as the monetary tightening effect set in.

Pending home sales for March will arrive at 10 pm. Growth every month should moderate to 0.5% from 0.8% in the prior period.

It is 27 April, Thursday, 8.50 am in Singapore and 8.50 pm in New York. So far, the technology companies have given a good set of results. Next in line will be Amazon. This week has been a negative week for our trades, but we are hopeful to end the month in green as we pulled back our positions and closed unrealised losses more aggressively than before during earning season. It is part of our more prudent risk management style for this season.

We hope you had a splendid April too!