4 months ago • 2 mins
What’s going on here?
Meta reported stellar results late on Wednesday.
What does this mean?
Investors might have been biting their nails after Snap’s recent disappointing update, but Meta hasn’t followed in its rival’s footsteps. The social media behemoth saw a 6% rise in monthly active users across all its platforms compared to last year. And Meta’s making the most of each user too – thanks in no small part to Reels – with average revenue per user beating expectations. The result: Meta reported its first double-digit revenue growth since 2021, a welcome change after a few lackluster quarters. And the future’s looking rosy too, with an optimistic outlook and talk of an "exciting roadmap" that includes new offerings and AI investments. And investors are clearly on board: despite a 139% rally this year, Meta’s stock climbed another 5%.
Why should I care?
The bigger picture: Where angels fear to Threads.
One of those new offerings is Threads, designed as a direct rival to Twitter, which amassed 100 million users within days of its launch. And analysts predict it won’t stop there – they’re forecasting 200 million daily users and a hefty $8 billion in annual revenue over the next two years. Sure, that’s just a drop in the bucket compared to Meta’s current earnings, but it’s still more than Twitter raked in during its last year as a public company. And once Threads has a solid user base, there could be more opportunities to monetize it.
Zooming out: Not ad infinitum.
Meta’s results, along with Alphabet’s earlier this week, could be a sign that the advertising market is rebounding. And one thing that’s kept it down could soon be ebbing: see, the Federal Reserve did make another demand-depressing interest rate hike of 0.25 percentage points on Wednesday, but there’s hope that could be the last increase of the year. And while the central bank has left the door open for more hikes, markets are putting the odds at over 50% that there won’t be any more in 2023.
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