Meta Platforms (META +0.22%) stock is losing ground in Thursday's daily trading session. The social media giant's share price was down 4.2% at 12:30 p.m. ET, according to data from S&P Global Market Intelligence.
Meta published its third-quarter results after the market closed yesterday, delivering performance that came in well ahead of the market's expectations. On the other hand, the company issued cautious forward guidance. In addition to its soft projections and commentary, tech stocks are also struggling today. The Nasdaq Composite index is down roughly 1.9% as of this writing.
NASDAQ: META
Key Data Points
Meta stock is stumbling despite a great quarter
Meta's Q3 results handily beat expectations on nearly all fronts. The company posted earnings per share of $4.39 on revenue of $34.15 billion. The company's earnings performance beat the average analyst target by $0.76 per share, and sales beat the average target by roughly $700 million. But the company's forward guidance and commentary are dragging on the stock -- along with a general uptick in bearish sentiment surrounding the tech sector.
For the fourth quarter, Meta is guiding for sales to come in between $36.5 billion and $40 billion. Meanwhile, the average analyst estimate had called for sales of $38.87 billion in the quarter. In addition to the midpoint of its guidance falling short of Wall Street's target, management's commentary during the earnings call has been broadly perceived as cautious.
What's next for Meta stock?
After struggling last year, Meta is back to posting very strong business performance. The company's revenue rose 23.2% year over year (YOY) in the third quarter, and the company's operating income margin jumped to 40% from 20% in the prior-year quarter. In conjunction with these trends, the company's net income soared 143% YOY to reach $11.58 billion.
Additionally, the company saw very strong performance on key user engagement fronts. Daily active users (DAUs) on the Facebook platform rose 5% YOY to reach 2.09 billion, and monthly active users were up 3% to hit 3.05 billion. Meanwhile, combined DAUs for Facebook, Instagram, WhatsApp, and other platforms increased 7% YOY to reach 3.14 billion, and monthly active users were up 7% to hit 3.96 billion.
Meta's business performance supports a long-term bull case for the stock, but the company's share price could face near-term pressures from factors unrelated to its own results. The overall macroeconomic outlook remains highly uncertain, and it's possible that tech stocks could continue to see some pullbacks on the heels of what has generally been a very strong year for the sector.
