Meta's Earnings; Time To Buckle Up For now, at least, we can cautiously say that tech hasn't looked this promising in a year. It's time to get excited again.

Meta Platforms Inc (NASDAQ: META), formerly known as Facebook, had an impressive Q1 2023 earnings report, beating analysts' expectations and showing strong growth in several key areas. As a result, the company's shares gapped up on Thursday's open to the tune of 15%. It was both a remarkable result and a remarkable response, which bodes well for the tech company as a whole.

We wrote yesterday about how both Google and Apple had done just enough to keep the tech industry buoyant with their earnings beats, but this from Meta is a whole other story. The share price action suggests that the positive momentum could continue in the coming days, so get excited. It's a similar gap to what they experienced at the end of Jan, and we could be looking at the start of another fresh multi-month rally.

Smashing Expectations

Digging into the numbers, the company's GAAP EPS came in at $2.20, well ahead of the consensus estimate of $1.97. Meanwhile, the company's revenue of $28.6 billion also beat expectations and showed growth of 2.7% year on year. It wasn't quite the double-digit growth results of yesteryear, but like their tech titan peers yesterday, it will be more than good enough for now. Remember, it's only a few months since people were spelling the end of tech as we knew it, as rising interest rates struck home the nails in many a Silicon Valley company's coffin.

But the recovery story has been truly one for the ages. Since last November, Meta shares have tacked on 175%, including this morning's jump. And the cherry on top? Well, they're still only barely halfway on their journey to undoing all of last year's selloff.

The past quarter's numbers were driven largely by growth in the company's advertising business, which crushed analyst expectations and surprised investors. Meta's user base also continued to grow, with daily active users (DAUs) reaching 2.04 billion. The company also noted that its efforts to increase ad efficiency had paid off, with the average price per ad increasing by 22% year-on-year. In addition, management saw fit to issue forward guidance that also came in hot, with Zuckerberg et al expecting Q2 revenue to be in the region of $29.5-32 billion.

Looking Ahead

In addition to its advertising business, Meta's other business units also showed strong growth. Looking ahead, Meta's CEO, Mark Zuckerberg, highlighted the company's focus on privacy and building a metaverse, a shared virtual space that's expected to be the next big thing in social media. The company is also investing in its messaging platforms, such as WhatsApp and Messenger, to drive further growth and revenue.

Meta's strong earnings report is likely to have a positive impact on the broader tech market, particularly other social media companies. Shortly after the market opened on Thursday, the S&P 500 index was up a cool 1.25%, with most commentators thanking Meta for the boost. Those of us on the sidelines know that analysts are remaining bullish on Meta's prospects for the near and medium term. MarketBeat's MarketRank Forecast has a Moderate Buy rating on the stock, based on 40 Buy recommendations out of a total of 49 market ratings.

Some price targets to be kept in mind include the Royal Bank of Canada's $285, Deutsche Bank's $290 and Guggenheim's $320. The latter of these is pointing to an upside of more than 30%, and that's including this morning's jump.

So get excited, both for Meta and tech as a whole. Their strong earnings report is a positive sign for the company and will reinforce those from their peers yesterday. It will be a while before we're back to the heady heights of 2020 and 2021, but for now, at least, we can cautiously say that tech hasn't looked this promising in a year.