Meta Platforms Earnings Preview: Tensions with Beijing in Focus

Chinese advertisers accounted for more than $18 billion of the company’s revenue last year

• Meta is scheduled to report quarterly earnings on Wednesday after the market closes.
• The company has exceeded earnings-per-share (EPS) and revenue estimates three quarters in a row.
• It is expected to announce an EPS of $5.20 on $41.36 billion in revenue, both figures lower than last quarter.
• Chinese advertisers accounted for more than $18 billion in revenue for Meta last year. The relationship is in flux, which could become a major catalyst for stock movement.

Meta Platforms (META) will report quarterly earnings tafter the stock market closes on Wednesday. It will be the third Magnificent Seven\ stock to report this quarter, and so far there haven't been too many crazy moves. While Meta has exceeded earnings-per-share (EPS) and revenue estimates handily three quarters in a row, estimates are now lower and tariff implications remain uncertain.

Meta is expected to announce an EPS of $5.20 on $41.36 billion in revenue in a few days.

From high to low this year, Meta’s stock has had a point range of over $250. Sitting at $547 per share, there's a long way to go before getting back to the all-time high price of $740.91 realized in February. It's no surprise to see continued volatility given its strong performance in China last year, and uncertainty with China moving forward. Tariff implications are still on the table, and the volatile market is reflecting that.

In 2024, Meta brought in over $18 billion in revenue from Chinese advertisers. That's a significant chunk of the company’s total revenue, which was $164.5 billion—a 22% year-over-year increase from 2023. If the tensions between the United States and China grow, this could translate to a multi-billion dollar hit in revenue for Meta alone. Obviously, that's a tricky spot to be in when the goal is to bring the Meta stock price higher over time.

With so much uncertainty, we can always check out the implied volatility of the options market for more context around the earnings announcement and beyond.

We can see a +/- $44.36 expected stock price move for this week, which is about 8% of the current notional value of the stock price. This is on the high end of earnings reports that typically fall between 5%-10% of the stock price.

Looking farther out in time, we can see a +/- $83.21 expected stock price move in the July options cycle. This cycle has over 80 days to expiration, but the weekly options cycle accounts for over 50% of this expected range. This tells us there is a big weight being placed on this earnings announcement, and a lot of uncertainty.

Bullish on Meta stock for earnings

If you're bullish on META stock for earnings, you're looking for an EPS and revenue beat for the quarter. From a general market perspective, it doesn't hurt that the VIX has collapsed quite a bit ahead of the big tech stock earnings announcements. Shifting the focus from China to a plan to scale AI growth could be the best course of action to bring bullish traders and investors to the table for Meta earnings.

Bearish on Meta stock for earnings

If you're bearish on META stock for earnings, you're looking for a weak outlook for 2025, and weak performance numbers for the quarter. If Meta misses EPS or revenue estimates, it would mark the first miss in over three quarters. All that said, we need to see more clarity around a softening in tensions with China if Meta is going to quickly revert to all-time-high stock price ranges. It's hard to imagine the stock getting back up to $700+ while tensions remain high and Chinese revenue reduction implications are in the headlines. As long as tensions remain high, bearish Meta traders will be lurking.

Tune in to Options Trading Concepts Live on Wednesday at 11 a.m. CDT for a deeper look at Meta stock options strategies ahead of the announcement after the close.

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb  

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