Meta stock surges after company reports 11% rise in revenue

Meta stock rallied as the company reported an 11% rise in revenue on Wednesday, beating Wall Street expectations.

Revenue grew to $32bn in the quarter ending in June, compared to analysts’ average estimate of $31.12bn, marking Meta’s most profitable quarter since 2021. The news sent stocks surging by 7% in after-market trading.

The earnings report continues something of a turnaround for the Facebook parent company, after a shaky rebrand and pivot to virtual reality last year. It follows Meta has recently launched several new products and made closely watched moves on artificial intelligence.

Meta recently launched a new version of its open-source AI large language model, Llama, in partnership with Microsoft. But the company’s most high-profile launch has been Threads, its competitor to Twitter that quickly racked up more than 100m of subscribers. Analysts are expected to have questions about whether Meta has been and will be able to maintain that momentum in the face of Twitter’s own rebranding.

“The app launched with incredible success, but questions remain on whether it can sustain momentum following its post-curiosity bump,” said Mike Proulx, the vice-president and research director at Forrester, in a statement. “The timing and vision for new features and an update on user engagement will hopefully be a key focus during Meta’s earnings call.”

Last quarter, Mark Zuckerberg said despite doubling down on new efforts like AI the company had not eased up on its investment into its namesake, the Metaverse. However, analysts say its recent product announcements could give the company the cover it needs on any lack of progress on the Metaverse.

“Meta’s momentum on Threads, Reels and generative AI allows the company to further de-emphasize its so far fruitless metaverse ambitions,” Proulx said. “I expect ‘metaverse’ to be glossed over for the second quarterly earnings call in a row.”

Mentions of AI efforts were a boon to tech stocks last quarter but this quarter is a test of many of the tech firms’ commitments.