- Meta saw a 50% spike in earnings in Q4.
- The stock rose some 4% on Thursday.
- Meta stock got several analyst upgrades post-earnings.
Meta saw a massive 50% increase in earnings in Q4.
Shares of Meta Platforms (NASDAQ:META) rose about 4% in morning trading after the Magnificent Seven firm released its fourth quarter and full-year earnings.
The gains reflect the social media giant’s strong fourth earnings. Meta saw revenue climb 21% in the quarter to $48.4 billion, which was better than estimates of $47.0 billion.
Net income skyrocketed 49% to $20.8 billion, while earnings rose 50% to $8.02 per share. That blew away estimates of $6.77 per share.
However, the strong quarter was tempered somewhat by its muted first quarter of 2025.
Lower Expenses in One Key Area Boosts Q4 Earnings
The spike in Q4 revenue was due to a few factors. One, the number of daily active users on its family of social media apps rose 5% year over year. Two, ad impressions on its sites rose 6% for the quarter, and three, the average price per ad gained 14%.
Given that Meta makes $47.3 billion of its $48.4 billion in total revenue on its social media sites, or 97%, those three factors accounted for the revenue gains. The firm’s social media sites generated $28.3 billion in income from operations.
Meta’s Reality Labs business, which includes its virtual reality products, accounted for $1.1 billion in revenue, essentially flat year over year. However, the business had a $5 billion net loss, which was an 8% bigger loss than the same quarter a year ago. It brought down overall operating income for Meta to $23.4 billion.
For the full year, Meta performed well, with total revenue up 21% to $164.5 billion. Net income rose 59% to $64.5 billion in fiscal 2024, or $26.61 per share.
The key to Meta’s earnings growth was its expense discipline. A big part of that was a 67% drop in general and administrative expenses to $761 million due to a $1.55 billion decrease in the accrued losses for certain legal proceedings.
However, marketing and sales expenses were essentially flat, offsetting a 16% increase in research and development spending to $12.2 billion. Overall, total costs and expenses were only 5% higher, rising to $25.0 billion in the quarter. For the full year, expenses rose about 8% to $95.1 billion.
Muted Q1 Gains Expected
Meta did not provide a full-year fiscal 2025 revenue or earnings outlook, but it did offer guidance for the first quarter.
The firm expects first-quarter revenue to be in the range of $39.5 billion to $41.8 billion. That would be down from Q4, but up 8% to 15% year over year. However, this was mostly below analysts’ expectations of $41.7 billion, save for the very top end of the range.
“While we are not providing a full-year 2025 revenue outlook, we expect the investments we are making in our core business this year will give us an opportunity to continue delivering strong revenue growth throughout 2025,” CFO Susan Li said.
Also, expenses are projected to be higher. Meta expects 2025 total expenses to be in the range of $114 billion to $119 billion. That would be between 20% and 25% higher than 2024. The largest single largest driver of expenses is anticipated to be infrastructure costs followed by employee compensation. Meta plans to add technical talent in the priority areas of infrastructure, monetization, Reality Labs, generative artificial intelligence (AI), as well as regulation and compliance.
Further, 2025 capital expenditures will be in the range of $60 billion to $65 billion. That’s up significantly from $39 billion in 2024 – a 53% to 66% rise.
“We expect capital expenditures growth in 2025 will be driven by increased investment to support both our generative AI efforts and core business,” said Li.
Meta Pays $25 Million Settlement to End Trump Lawsuit
It was also reported Wednesday, initially by the Wall Street Journal, as well as by NBC News, that Meta agreed to pay $25 million to settle a lawsuit filed by President Trump in 2021. The lawsuit was over Meta’s decision to suspend Trump’s account after the January 6 riot at the Capitol. Of the $25 million settlement, $22 million will go to fund Trump’s library.
Meta stock has gotten off to a fast start in 2025, up about 19% already, year-to-date. Over the past 12 months it has gained roughly 75% and is trading at around $704 per share.
It also got a slew of price target upgrades after earnings, with Truist bumping it up $70 to $770 per share and TD Cowen raising it $95 to $785 per share. This would represent gains of 9% to 12%.
Meta’s P/E ratio is much lower than some of its Mag 7 peers at 32 with a forward P/E of 26. However, investors may want to look for a lower entry point to get in.