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Meta Platforms (META - Free Report) is set to report its fourth-quarter 2022 results on Feb 1.

Meta expects total revenues between $30 billion and $32.5 billion for the fourth quarter of 2022. Unfavorable forex is expected to hurt year-over-year top-line growth by 7%.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $31.31 billion, indicating a decrease of 7.02% from the year-ago quarter’s reported figure.

The consensus mark for earnings is pegged at $2.23 per share, up 4.7% over the past 30 days, suggesting a decline of 39.24% from the figure reported in the year-ago quarter.

Meta’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters and missed thrice, the average negative surprise being 2.55%.

Meta Platforms, Inc. Price and EPS Surprise

Platforms, Inc. price-eps-surprise | Meta Platforms, Inc. Quote

Let’s see how things have shaped up for the upcoming announcement.

Factors to Note

Meta’s fourth-quarter top line is expected to have been affected by a challenging macroeconomic environment, high inflation, and rising interest rates hurting the ad spending budgets of enterprises. This is expected to have weighed on the ad revenues of Meta in the to-be-reported quarter.

Meta’s ad revenue business is facing declining growth due to ad targeting-related headwinds created by Apple’s (AAPL - Free Report) iOS changes.

Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. However, measuring these outcomes is tough.

In the third quarter of 2022, Meta’s ad revenues represented 98.3% of the total revenues, which decreased 3.7% year over year to $27.24 billion. The declining revenue trend is expected to have continued in the fourth quarter.

Nevertheless, Meta is banking on adding users, driven by features like protections against malicious links in Facebook messenger and Instagram direct messages using automated systems, Instagram impostor alerts, and increased Instagram verified badge specialty.

Meta also announced the introduction of age verification technology to Facebook Dating in the United States to prevent users under the age of 18 from accessing experiences meant to be enjoyed as adults.

However, higher operating expenses due to an estimated $900 million in additional charges related to the consolidation of office facilities are expected to have hurt profitability.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Meta currently has an Earnings ESP of +13.39% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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