Tech giants$Meta Platforms (META.US)$The third quarter earnings report was released this morning.

Meta achieved revenue of $34.15 billion in the third quarter, up 23% year on year; diluted EPS was $4.39, up 168% year over year, all exceeding market expectations.

However, there was a huge shock in Meta's stock price after the market. It once rose by more than 5% after the earnings report was announced, then fell all the way down, and finally fell by more than 3%. As of press release, the company was down more than 3% in the intraday period.

How is Meta's financial report?

Overall, Meta's revenue growth rate doubled month-on-month in the third quarter, EPS profit increased 168%, and operating profit margin doubled year-on-year.

Looking at it by business:

Core business - the advertising business has resumed its growth trend

Meta's advertising revenue for the third quarter was US$33.64 billion, up 24% year over year, accounting for more than 98.5% of total revenue.

Financial reports show that the META app series Family of Apps, which includes Instagram, Facebook, and WhatsApp, has driven revenue growth.

Looking at the number of active users, as of the end of the third quarter, the number of daily active users (DAU) of the app family was 3.14 billion, an increase of 7% over the previous year.

Facebook's daily active users (DAU) was 2.09 billion, an increase of 5% year-on-year, higher than the expected 2.07 billion users;

The monthly active users (MAU) was 3.05 billion, up 3% year over year, in line with expectations;

The average revenue per user (ARPU) is $11.05.

Many analysts believe that Meta's core advertising business has resumed its growth trend, especially its Instagram and Facebook subsidiaries.The main reason is that statistics show that Reels on the platform has been viewed more than 200 billion times a day.It helps increase user time, but advertisers may still need some time to adapt to this new format.

A large part of the reason for Meta's re-acceleration appears to be,It has done a great job in improving the effectiveness and targeting of online adsThis is thanks to the company's huge investment in artificial intelligence, which helps it attract retailers who want to offer targeted promotions to customers.

In terms of Instagram's short video app Reels, Zuckerberg said:

We estimate that through all of the rankings and product improvements we've made,Reels has increased Instagram usage time by more than 40% since its launch.We also reached our profit milestone earlier than expected, and we estimate that Reels is now net neutral on the company's overall advertising revenue.

Furthermore, judging from the volume-price relationship, ad impressions continued to grow rapidly by 31%, yet the unit price of advertisements fell 6% year-on-year, which indicates that there is potential profit pressure on the sales-driven ad revenue model.

The metaverse's loss momentum has not abated

Reality Labs, a department related to the metaverse and responsible for AR and VR business, had revenue of 210 million US dollars in the third quarter, down 26% from the previous year; losses reached 3.74 billion US dollars,Flat for the second quarterLosses increased by 1.9% compared to a year ago.

Why was there a huge shock in stock prices after the market?

Meta warned when announcing performance guidelines,Next year, the metaverse business that the company is focusing on investing in will significantly expand its losses from this year's level.

Also,Meta estimates that revenue for the fourth quarter will be 36.5 billion to 40 billion US dollars.The previously unanimous estimate of 38.7 billion US dollars.

Because 99% of Meta's revenue comes from advertising, the company's overall revenue guidelines are basically equivalent to the advertising business situation, that is, the advertising business is expected to reach 36.1 billion to 39.6 billion US dollars in the fourth quarter.A year-on-year increase of 15%-26%. Although there is still high growth in this range, investors were not pleasantly surprised compared to market expectations.

Furthermore, during the performance call, Meta also warned,The advertising business, which is its largest source of revenue, is heavily dependent on the macroeconomic environment associated with spending.Meta's chief financial officer Susan Li said in a conference call that Meta is very vulnerable to fluctuations in the macro environment.The revenue outlook for next year is uncertain.

According to market opinion, due to Meta's “flat” guidance for the fourth quarter, it did not continue the previous trend of continuously exceeding market expectations, which is one of the reasons for the weakening of stock prices after the market.

Overall, however, market pessimism is mainly due to the current financial environment where liquidity is tight. Meta, which has risen as high as 150% this year, has not recovered much recently, and investors are generally afraid of heights. Therefore, once there is a slight flaw in financial reports, investors' pessimism will begin to spread, leading to a decline in stock prices.

It is worth noting that,Meta's target price was also frequently lowered by analysts after its performance:Evercore ISI lowered the target price from 435 dollars to 425 dollars; Piper Sandler lowered the target price from 365 dollars to 355 dollars.

Editor/Somer