Meta Earnings Preview

With traders buzzing about Powell’s shocking reincarnation of Arthur Burns as he steamrolled over the ghost of Paul Volcker again and again as he sent risk exploding higher and undoing all the Fed’s hard work since Jackson Hole, let’s not forget that after the close today we get earnings from one of the gigacaps when Facebook Meta reports Q4 results.

So for those focusing on micro even when macro is all the rage, here is a preview of META’s earnings courtesy of JPM TMT trader Ron Adler.

MEGACAP TECH (META, GOOGL, AMZN) – Earnings remain a focus as we play our two favorite games, “What are the bogeys?” and “What’s priced in?” Cost cutting and competition are thematically relevant for the group. META is the cleanest story, given the comps and lack of cloud dynamics, and they’re the furthest along on costs. GOOGL provided some hope on cost-cutting comments a few weeks ago. However, the number of tangible levers they seem willing to pull to drive profitability remains in question, while AI and regulatory weigh further. AMZN has many moving parts, but all eyes remain on AWS; this print seems like a clearing event. Regarding preference, I like META > AMZN > GOOGL into this week. See below for more thoughts on the META, GOOGL & AMZN setups. 

META – Remains a top idea for many given cost rationalizations, lapping IDFA comps and investments bearing fruit. The bear case really hasn’t changed (Competitive threats, saturated user base, overearning core biz, platform changes and obstinate mgmt).
EXPECTATIONS – Q4 Revs -4% (vs. guide -3-11%) & Q1 Guide -3%. F23 Expense Guide trimmed to ~$95B at midpoint (vs. current $97B). Reports 2/1, Implied 10.7%

And here is Goldman (courtesy of traders Callahan and Bartlett)

META…Meta reports Wed post close. We have as a 7 on “1-10” positioning scale. With stock now +26% ytd and +74% off of  November lows, and the feedback we hear from most skewing more positive since the stock bottomed, it’s hard to argue this hasn’t become a popular long again. Investors expect Q4 Revenue beat vs. consensus, and looking for another cut to FY23 OpEx and/or CapEx guide.  Options implying a 9% move. 

For the META results, joins us just after the close.