Middle East Tensions Impact Meta’s Stock Price – A Closer Look

The Meta share price went down on Thursday, a day after the business announced strong profits for the third quarter but issued cautious comments regarding the impact of the current conflict between Israel and Hamas.
After the report was released, shares of Meta initially increased, but those gains were quickly negated when Susan Li, the chief financial officer for Meta, issued a warning to investors about the volatility in the Middle East.
However, many analysts continue to have a positive outlook on Meta’s performance in spite of the unpredictability surrounding the battle.

Investments in Meta However, many analysts continue to have a positive outlook on Meta’s performance in spite of the unpredictability surrounding the battle.

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The slowdown in demand for brand advertising was cited by Evercore analysts as “the BIG negative” from the conference call. They suggested this was due to the war. They point out that Snap provided comparable commentary in its most recent earnings call and stated that the situation is comparable to the advertising slowdown that occurred after fighting broke out in Ukraine.

“We believe ad demand has already begun to recover at Meta,” they stated in a note published on Wednesday. They went on to say that they “believe near-term ad market demand will be more volatile than usual.”

The researchers from Evercore stated that a lot is “working” at Meta, despite the fact that the need for brand advertising is decreasing. They added that AI is what is driving engagement, and the company’s tagline of “year of efficiency” is expanding into years of efficiency.

Morgan Stanley analysts reported that despite the fact that Meta has experienced a slowdown in branded advertising, they feel the company has been less damaged than others in its industry. According to them, Meta’s efforts in AI and its increased engagement on Reels bring back memories of the time when the firm was initially developing its presence on Facebook and Instagram. dropped by more than 2 percent. On Thursday, a day after the company revealed solid earnings for the third quarter but issued cautious comments about potential ad weakness due to the ongoing conflict between Israel and Hamas, the company announced that it has hired new employees.

In the most recent quarter, Meta recorded sales of $34.15 billion, an increase of 23% and the company’s fastest rate of growth since 2021. The net income of the corporation increased by 164% to $11.58 billion, which is equivalent to $4.39 per share. Wall Street was pleasantly surprised by the company’s sales and earnings, which came in higher than anticipated. This was a nice shift for investors after the primary digital advertising sector of the company declined for three consecutive quarters in 2022.

After the report, shares of Meta originally increased, but those gains were wiped out after Susan Li, the chief financial officer of Meta, issued a warning to analysts about the unpredictability of the Middle East. As a direct consequence of the situation in Israel, Meta provided forecasts for the fourth quarter that ranged from $36.5 billion to $40 billion. The typical gap offered by the corporation is $2.5 billion; however, this range is significantly larger.

During the call with analysts, Li stated that “we have observed softer ads at the beginning of the fourth quarter, correlating with the start of the conflict,” and that this is reflected in the company’s outlook for revenue for the fourth quarter.

The analysts noted in a note that was released on Thursday that while all advertising may be impacted by geopolitical action, advertising allocation continues to be a relative game, and they feel that META’s differentiation gap is expanding in comparison to most of its peers.

The foundations of Meta’s business, according to analysts at Deutsche Bank, “remain best-in-class,” and they can endure the impact of the conflict, as stated in the previous sentence. They went on to say that Meta’s product development pipeline is “rich with products,” including its X competitor Threads and other AI tools that might contribute to engagement and revenue.

“As such, we have growing conviction in the thesis of durable top-line growth at Meta despite near-term volatility related to geopolitical uncertainty,” they wrote in a note that was released on Thursday.