Is Meta Platforms’ — formerly known as Facebook — better-than-expected, first-quarter earnings report all that it’s cracked up to be? I have a hunch that it’s not… So I put together a FB Q1 earnings report to tell you exactly why.
Shares of Meta Platforms Inc. (Nasdaq: FB) jumped about 18% on Wednesday after the company reported earnings that exceeded expectations, but the revenue was disappointing. Daily active users, which dropped in Q4 for the first time, rose a little from 1.93 billion to 1.96 billion — I’m calling BS on that, too. I mean, Twitter just admitted it’s been cooking the books on its user numbers, so Meta is no doubt doing the same. But I digress…
Revenue came in at $27.91 billion versus the expected $28.2 billion.
So with all these mixed numbers, what should we make of it?
A Breakdown of FB’s Q1 Earnings Report
Well, the stock popped off Wednesday because people have been shorting it like crazy since the devastating Q4 earnings report in February that sent it crashing another 26% — it’s down about 47% from its Sept. 1 high… and that’s including this week’s bump.
Bar Chart
But like I said above, I don’t put much credence into the amount of daily users Facebook gets, so I’m still skittish on the stock. The real problem with this social media platform lies in its ad spends…
I’ve noticed that Meta has been having a ton of trouble with other companies just eating its lunch of late.
Social media companies like TikTok are destroying Meta, and Elon Musk is buying Twitter. FB used to have a massive edge in its advertising algorithm. When other social platforms were building rockets, FB was already orbiting the moon.
But now, that edge has all but disappeared.
When’s the last time you bought something from an advertisement on Facebook? I can name three things my kids wanted me to buy this week alone from TikTok.
And the company feels the pressure.
Hell, we all had front-row seats to the company changing its name to Meta. To me, that screams MID-LIFE CRISIS!
And don’t let Wednesday’s pop fool you… If this were actually a good FB Q1 earnings report, then we would have seen the stock bounce much higher than it did considering how far it’s fallen.
If you’re looking for a level to start trading FB, it’s not going to be at the psychological $200 level everyone thinks it is…
Pay Attention to THIS Level
The real price level momentum traders and big hedge funds are waiting for is $225.
This is where FB gapped down to after the Q4 2021 earnings debacle.
So for now, I’m still skeptical and bearish on the stock. And in terms of new revenue streams on the horizon, I don’t see any.
I have no idea what could replace the ad business revenue, which is just getting crushed right now.
If FB doesn’t get its Metaverse up and running soon, the outlook on the longevity of the company looks bleak, which is shocking considering how big a juggernaut Facebook was.
We have to look at the FB Q1 earnings report like seasoned investors.
Right now, we’re trading around the $200 level. Are we going to go to $225 next, or are we going to hit a new low first?
My money is on a new low.
As always, send any topics you’d like me to cover to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
P.S. One of the best ways to avoid Wall Street screwing us over is by following where the money is flowing.
The market is like this big ocean with several different currents moving through it at all times. But one of the strongest currents is the money that flows from large funds into the market on a monthly basis.
Hedge funds aren’t always the most creative entities on Wall Street — they’re all trying to get into the same stocks in the S&P 500, Nasdaq or Russell 2000. That means they tend to cluster into the same best-performing names…
Names like the one I’m looking at right now.
LFG!
