Meta Earnings Point To Soft Landing
It certainly feels a lot more like a party than it probably should be.
Meta (META), formerly Facebook, shares rocketed higher after it reported earnings yesterday aftermarket.
The company hit almost every mark.
Revenue was more than expected. It came in at $32 billion instead of the expected $31.5 billion.
Daily Active Users had a tiny uptick to two billion.
The company said it expects upcoming Q1 revenue numbers to be about the same as Q1 2022.
And it announced a $40 billion stock buyback plan.
Although there is dubious follow-through when it comes to these plans (and they are usually highly offset with execution stock options packages), the news catapulted Meta shares up about 30% after the report was released.
Of course, we also have to remind you that even after this rally, Meta shares are still down 50% from their past highs.
But let’s get back to the earnings report.
Because there is a key number we watch that doesn’t just affect Meta, but is an indicator of advertising, business activity, and consumer demand.
It has become one of the best state of the economy indicators.
The number is Meta’s Average Revenue Per User (ARPU).
The ARPU, as the name implies, encompasses how much revenue Facebook is able to make per user.
It is the single number that shows how well the company is doing, how much users are spending, and how much businesses are advertising.
And, since it’s one of the world’s largest advertising platforms, the number shows how well the economy is really doing too.
That’s why we’re happy to have seen a pleasant surprise for the most recent quarter.
The ARPU for the quarter came in at $10.86.
That’s down a bit from the Q4 ARPU of $11.57.
So it’s not great, but it’s not the end of the world for Meta or the global economy either.
Watch this number going forward.
If it starts moving up, you can expect a better than soft landing for the economy.