Social media giant Meta (META) will report its first quarter results Wednesday as Wall Street looks for clarity on the impact of President Trump’s reciprocal tariffs on US businesses.
Meta’s report comes after rival Google (GOOG, GOOGL) announced its own earnings last week, beating on both the top and bottom lines on the strength of its ad sales.
During that company’s investor call, Google CBO Philipp Schindler said it was too early to comment on the potential economic impact on the current quarter, but did mention that the Trump administration’s changes to de minimis exemptions will cause “a slight headwind to [Google’s] ads business in 2025.”
The de minimis exemption lets companies ship items under $800 to the US without having to pay a duty. That, Schindler explained, will have a particular impact on Google’s APAC-based retail customers.
For the quarter, Meta is expected to report earnings per share (EPS) of $5.25 on revenue of $41.3 billion, according to Bloomberg consensus estimates. The company saw EPS of $4.71 on revenue of $36.4 billion in Q1 2024.
Advertising revenue is expected to top out at $40.5 billion, while Meta’s Reality Labs segment is set to report an operating loss of $4.5 billion and revenue of $496 million.
Meta’s stock price is down more than 5% since the start of the year.
“We attribute weakness to [Meta’s] greater exposure to advertising (no cloud business for [Meta]) and China-based advertisers (>10% exposure for [Meta]) who have reportedly pulled back on ad spend,” Jefferies analyst Brent Thill wrote in an investor note.
In his own note, BofA Securities analyst Justin Post said he expects to see a modest beat on Q1 revenue but believes the company will offer a more conservative guide for the second quarter.
Meta’s earnings come as the company is battling the Federal Trade Commission (FTC) in court over claims the social media company holds an illegal monopoly over the “personal social networking.”
The FTC is looking to force Meta to sell off both Instagram and WhatsApp as a remedy. The commission claims Meta originally purchased the apps as part of a “buy-or-bury” campaign to fight off potential competitors.
According to the Wall Street Journal, CEO Mark Zuckerberg offered to settle with the FTC for $450 million. The commission, however, asked for $30 billion. Zuckerberg eventually raised his offer to $1 billion, but the FTC would only go as low as $18 billion.
Zuckerberg has met with President Trump several times over recent months as he seeks to develop a closer relationship with the president. For instance, the CEO attended Trump’s inauguration in January, and Meta donated $1 million to Trump’s inauguration fund.
Also in January, the Wall Street Journal reported that Meta had reached a $25 million settlement with Trump related to the company’s decision to ban him from its platforms following the Jan. 6 attack on the Capitol.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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