Last Wednesday, Meta Platforms Inc. (NASDAQ: META) reported Q1 2025 earnings, which exceeded expectations with revenue and profits surpassing Wall Street’s forecasts despite concerns of a potential advertising slump due to increasing tariff tensions. The firm also raised its full-year capital expenditure guidance while issuing bold expectations for Q2.
Meta shares gained approximately 5% in pre-market trading on Thursday following the earnings release.
According to Bloomberg’s consensus estimates, Meta recorded an EPS of $6.43 and $42.3 billion in revenue, surpassing the expectations of $41.3 billion in revenue and $5.25 EPS. This marked an increase from Q1 2024, when revenue was $36.4 billion and EPS was $4.71.
“Despite global macro concerns, especially around tariffs, Meta has shown resilience in its ad revenue engine,”
— Brent Thill, Analyst, Jefferies (Investor Note)
Q2 Guidance: Beating Expectations Again
Meta is still expecting a pullback in ad budget spending from Chinese clients who account for over 10% of Meta’s ad business, but it appears the company will achieve its guidance of $42.5 billion-$45.5 billion in Q2 revenue ahead of Wall Street expectations of $44 billion.
Segment Performance
- Advertising revenue: $41.39 billion (vs. $40.5B expected)
- Reality Labs: Operating loss of $4.21 billion
- CapEx forecast: Raised to $64B–$72B (from $60B–$65B)
Meta’s Reality Labs division continues to be a cash drain, with the unit posting a $4.21 billion operating loss. However, Meta is doubling down on long-term investments, increasing its 2025 capital expenditure forecast by as much as $7 billion. The rise is linked to ongoing investments in AI infrastructure, data centers, and next-gen hardware.
Also Read: Reddit Reports Strong Q1 Earnings, Signals Confidence Despite Volatile Search Ecosystem
Stock Performance and Analyst Concerns
Meta stock is down 7% for the year, though it is up over 25% in the last 12 months. Jefferies’ Brent Thill suggested the stock’s underperformance relative to its competitors could be due to Meta missing business diversification into cloud services, which tend to have lower margins than advertising services, especially from clients in China who, according to some reports, are reducing expenditures due to geopolitical stress.
Legal Headwinds: FTC Monopoly Case Intensifies
Despite sustaining a significant lawsuit from the Federal Trade Commission (FTC) claiming they enforce an unlawful personal networking monopoly, Meta’s shares seem unaffected.
The FTC intends to compel Meta to divest Instagram and WhatsApp because of the alleged anti-competitive “acquire-and-eliminate” practices. Meta said in a statement of defense that their head, Mark Zuckerberg’s, settlement offer of $450 million was just as ideal. When the FTC went on to ask for a ridiculous 30 billion, Zuckerberg increased Meta’s offer to $1 billion, but the FTC wouldn’t bring down their demand below $18 billion.
Political Ties: Zuckerberg and Trump Connection
Reportedly, Zuckerberg is working to deepen his relationship with President Trump. He showed up at Trump’s 2025 inauguration, and to mark the occasion, Meta handed over a million dollars towards the inauguration fund. These donations might indicate a plan as they are founded on increasing regulatory scrutiny.
In addition, Meta settled a $25 million lawsuit with Trump after banning him due to the “unconstitutional” storming of the Capitol on January 6th.
Meta Q1 2025 Earnings Summary
| Metric | Q1 2025 Result | Wall St. Estimate | Q1 2024 (YoY) |
|---|---|---|---|
| Revenue | $42.3B | $41.3B | $36.4B |
| EPS | $6.43 | $5.25 | $4.71 |
| Advertising Revenue | $41.39B | $40.5B | N/A |
| Reality Labs Loss | ($4.21B) | N/A | ($3.99B est.) |
| Q2 Revenue Guidance | $42.5B–$45.5B | $44B | $32.2B (Q2 2024) |
| Full-Year CapEx Forecast | $64B–$72B | $60B–$65B (prior) | $30B–$33B (initial 2024) |
| YTD Stock Performance | -7.3% | — | +25.4% (past 12 months) |
Bottom Line
Despite accruing geopolitical and regulatory challenges, Meta has maintained a strong performance in the advertising sector during the first quarter of the year. Meta also displayed confidence in their economic strategy for the second quarter by revising both capital expenditure projections and revenue expectations. This indicates long-term economic investment from the company, even while contending with politically charged legal environments Meta finds itself.
Also Read: Microsoft Tops Q3 Expectations With $70B Revenue, Cloud and AI Growth Drive 7% Stock Surge
