What Happened?
Shares of social network operator Meta Platforms (NASDAQ:META) jumped 7.2% in the pre-market session after the company reported strong first quarter 2025 results which exceeded analysts' expectations across revenue, EPS, and EBITDA. Revenue grew 16% year over year, driven by a 10% rise in average ad prices and a 5% increase in impressions across Meta's Family of Apps.
The real story for the quarter was the 27% rise in operating income and a 37% jump in EPS, driven by a sharp rebound in ad pricing and disciplined expense management, despite elevated investments in AI infrastructure and product development.
Looking forward, Meta raised its capital expenditure outlook to reflect greater investment in data centers and AI, suggesting that growth investments remain a top priority. Overall, this quarter had some key positives: accelerating ad revenue, growing earnings, and a business model that continues to show operating leverage in a volatile digital environment.
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What The Market Is Telling Us
Meta’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 9.9% on the news that the company reported strong second quarter 2024 earnings. Meta slightly beat analysts' revenue guidance expectations for the next quarter. In addition, this quarter's revenue and EPS narrowly outperformed Wall Street's estimates. Looking ahead, the company expects to continue investing in Reality Labs as its Ray-Ban Meta AI glasses are seeing strong traction. Overall, this quarter seemed fairly positive, and shareholders should feel optimistic.
Meta is down 3.4% since the beginning of the year, and at $578.61 per share, it is trading 21.5% below its 52-week high of $736.67 from February 2025. Investors who bought $1,000 worth of Meta’s shares 5 years ago would now be looking at an investment worth $2,861.
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