Key Metrics To Watch For In Meta’s Upcoming Earnings

Key components of Meta’s first-quarter earnings presentation will include updates on sales, profits, user engagement, ad prices and the company’s artificial intelligence (AI) initiatives.

Revenue and Earnings Per Share (EPS)

Meta has beaten analysts’ expectations for revenue and EPS for seven consecutive quarters. The company makes its money selling digital advertising across its network of apps, and demand has been strong. Earnings have benefited from cost-cutting efforts that began in 2023, a period CEO Mark Zuckerberg called the “year of efficiency.”

Continued strong increases in revenue and EPS demonstrate a good balance between Meta’s capital-intensive growth initiatives and operational execution.

Family Daily Active People (DAP)

Family DAP is Meta’s high-level user engagement metric. Family refers to the company’s portfolio of applications: Facebook, Instagram, Messenger and WhatsApp. The DAP metric quantifies how many people log in and access a Meta app in a day.

For a company that sells digital ads, family DAP is like inventory. When more people use Meta apps, there are more advertising impressions to sell. Not only that, but advertising demand and effectiveness can rise as the user base grows. This is because a larger user base provides more data and audience targeting options.

Meta’s family DAP has been increasing for years, but the pace of growth has fluctuated between 4.27% and 15.45% since 2020. In the fourth quarter of 2024, family DAP was 3.35 billion, about 5% higher than the prior-year period.

Average Price Per Ad

Strength in ad prices indicates good demand. It signals that advertisers are generally happy with the value they’re getting for their ad investment. Alongside a rising inventory of ad impressions, this perception of value is critical for long-term growth. If ads don’t deliver results, advertisers will spend their money elsewhere.

Average ad price can be a tricky metric for digital advertisers. There are several huge players in this space—Google, Amazon, TikTok and Reddit, to name a few. Each is working to build its audience, which creates a continually expanding supply of advertising opportunities. Demand must grow also to keep advertising rates strong.

In 2024, Meta increased its average ad price by 10%.

Artificial Intelligence Investments

Meta regularly reports what it spends on capital investments, including AI. Total capital expenditures in 2024 was $39.2 billion. CFO Susan Li said the company expects to spend a jaw-dropping $60 billion to $65 billion in 2025.

AI represents Meta’s most compelling growth opportunity. The company is developing an open-source large language model called Llama. Morningstar reports that Llama is among the most cost-efficient LLMs available today. Additionally, if Meta can make further cost improvements, Llama has many interesting use cases—from generating effective, customized ad content for advertisers to reducing Meta’s application development costs.

Given Meta’s investment in AI, investors want to see these use cases take shape as transformational and competition-busting business initiatives.

Macroeconomic Factors Impacting Meta

Every global company faces macroeconomic risks. Three factors to watch for Meta are consumer spending, the U.S. regulatory environment and the ongoing U.S. trade war with China.

Consumer Spending

A slowdown in consumer spending in the U.S. and globally lessens the return potential for digital advertising. Advertisers are likely to limit their advertising budgets in response. Should the U.S. or other major economies fall into recession, Meta would feel the impact as slowing or negative sales growth.

Regulatory Environment

Meta is currently defending an antitrust lawsuit brought forth by the Federal Trade Commission. The suit could require the company to divest Instagram and WhatsApp. Congress is also investigating whether Meta collaborated with the Chinese government at the expense of U.S. national security.

How far these cases go could define Meta’s future. Some outlets report that Zuckerberg has courted President Trump to alleviate his company’s legal woes. Time will tell if that strategy proves effective.

China Trade War

Wells Fargo analysts estimate that 11% of Meta’s revenue comes from China-based advertisers, as quoted by Investing.com. These revenues are at risk under President Trump’s new tariff policy that imposes taxes of up to 245% on imported Chinese goods. The tariff costs can be absorbed by Chinese sellers or passed on to U.S. consumers, but either strategy likely limits advertising returns.

Analyst Expectations And Market Sentiment

In its last earnings presentation, Meta shared a first-quarter revenue guidance range of $39.5 billion to $41.8 billion. According to Tradingview.com, analysts expect the company to produce $41.38 billion revenue, near the high end of the guidance. Analysts also expect EPS of $5.24. These numbers represent quarter-over-quarter revenue growth of 14.4% and EPS growth of 21.3%.

Out of 72 analysts, 53 rate Meta a strong buy and 10 rate the company a buy. There are also seven hold ratings, one sell rating and one strong sell rating. Price targets range from $448 to $900, averaging to $710.90, which is about 30% higher than the current Meta stock price.

Meta’s stock price has declined in April, but this seems more related to the ongoing U.S. tariff saga than a company-specific trend. Many stocks and the S&P 500 have followed the same trajectory.

Bottom Line

Things to love about Meta right now are its revenue momentum, improving efficiency and exciting AI initiatives. However, the company also has some legal trouble to manage and may face short-term headwinds related to the U.S. economy and the trade war with China. These won’t impact first-quarter results, but investors should pay close attention to leadership’s commentary on these topics during the earnings webcast.

So far, more analysts view the legal and macroeconomic risks as temporary problems vs. long-term issues. If that’s accurate, now may be the time to scoop up Meta at a good price. Otherwise, see best stocks for 2025 for more investing ideas.

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