Meta’s Growth Rebounds, With Caveats

Mark Zuckerberg’s long national nightmare may be over—at least regarding Meta Platforms’ time in Wall Street purgatory. The social media giant reported 11% topline growth for the second quarter Wednesday, outperforming its bigger digital ad rival Google in ad growth for the period. More importantly, Meta projected third quarter growth of as much as 24.5%. If the company can deliver that result, it would be the first time since late 2021 that Meta has enjoyed 20% or more in growth, and follows several quarters last year where its revenue declined.

It’s understandable, then, that in after-hours trading Meta’s stock, which has been rallying all year, rose as much as 8% to above $322, its highest point since February 2022. The company’s growth collapse 18 months ago had sent the stock plunging to a low of $88 and sparked questions about the future of the Facebook parent company. But before Zuckerberg runs too many victory laps, a note of caution is warranted. Not to be too nit-picky, but the improvement in the business isn’t quite as dramatic as the numbers suggest. For one thing, the revenue recovery is partly due to the fact that foreign exchange pressures, which weighed on revenues last year, have diminished. Not only is the dollar not dampening revenue growth right now, Meta said the third quarter projection assumed the dollar would add three percentage points to its reported growth. (For more on how forex is changing tech's earnings season, see below).