Meta 2Q23 Earnings, Reality Labs Losses, Meta Stock

Happy Thursday. We will continue our earnings reviews with Meta. The discussion includes Neil’s thoughts on Meta’s 2Q23 results, the significant loses associated with Reality Labs (AR/VR), and Meta’s stock rollercoaster. Apple reports earnings a week from today – Thursday, August 3rd.

Meta 2Q23 Earnings

Meta’s core business of monetizing user attention via advertising continues to stabilize. We saw the early stages of this improvement in Meta’s last earnings release three months ago.

Management provided a few factors behind the continued improvement in 2Q23:

  1. An easier year-over-year compare. 2022 saw weakened results. 2Q marked a full quarter without Russia revenue.

  2. Improved Reels monetization.

  3. Increased ad supply.

  4. FX turning from a revenue growth headwind to tailwind. (This is something to note with Apple’s earnings next week.)

There is a simpler explanation at play for the continued stabilization: Thanks to Reels, Meta’s TikTok copycat, Meta is holding its own on the engagement front against TikTok. Not only is Reels keeping users on Facebook and Instagram, but it appears to be successfully adding new people into the Meta fold.

Key Meta data points from the quarter:

  • 3.9B people use at least one Meta property on a monthly basis.

  • 3.1B people use at least one Meta property on a daily basis in June.

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