Meta Stock Surges After Q1 Earnings, But Tariff Risks Linger

Meta Platforms’ stock jumped over 5% in after-hours trading on April 30, 2025, following a stellar Q1 earnings report that beat Wall Street expectations. Despite the positive momentum, concerns about U.S. tariffs and their impact on advertising revenue continue to loom over the social media giant.

Meta’s Q1 2025 earnings, released on April 30, underscored its ability to drive growth in a turbulent economic landscape. With a robust advertising platform and strategic AI investments, the company outperformed forecasts, boosting its stock price. However, potential tariffs and regulatory pressures pose risks to its long-term outlook, making Meta’s stock a focal point for investors.

Meta Platforms (META) delivered a strong Q1 2025, reporting earnings per share of $6.43 against expectations of $5.28 and revenue of $42.3 billion, topping estimates of $41.3 billion. The results, announced after market close on April 30, sparked a 5% surge in Meta’s stock price, which had been down 7% year-to-date at the close of regular trading. Posts on X echoed the optimism, with users like @HolySmokas noting, “Meta remains easy money.”

The company’s advertising revenue, which forms the backbone of its business, grew 15.9% year-over-year to $41.8 billion. This growth defied fears of a slowdown due to U.S. tariffs, particularly affecting Chinese advertisers. Analyst Brent Thill from Jefferies had warned of Meta’s exposure to China-based ad spend, estimated at over 10% of its total. Yet, Meta’s broad advertiser base and AI-enhanced ad tools mitigated these concerns.

Meta’s user metrics also impressed, with 3.38 billion daily active users, up 4.4% from last year, and a 9.5% increase in average revenue per user to $12.50. “Meta’s AI-driven ad improvements and growing engagement on platforms like Instagram Reels are key drivers,” said JPMorgan analysts, who expect these trends to continue into 2025.

However, the earnings report wasn’t without red flags. Meta raised its 2025 capital expenditure guidance to $64 billion to $72 billion, up from $60 billion to $65 billion, driven by AI and data centre investments. While this reflects Meta’s commitment to innovation, it raised concerns about cost management. The company slightly lowered its total expense guidance to $113 billion to $118 billion, signalling some cost-cutting measures, including layoffs in its Reality Labs division.

Tariff uncertainties remain a significant risk. The U.S.-China trade tensions, with tariffs on Chinese goods at 145%, could disrupt Meta’s advertising revenue if Chinese e-commerce firms scale back spending. MoffettNathanson analysts estimated a potential $7 billion revenue loss for Meta in 2025 due to these tariffs. Additionally, regulatory pressures, including a reported $30 billion FTC settlement demand, add to the challenges.

During the earnings call, CEO Mark Zuckerberg addressed these issues, emphasising Meta’s adaptability: “We’re focused on delivering value to advertisers and users, regardless of macroeconomic challenges.” The company’s Q2 revenue guidance of $42.5 billion to $45.5 billion, above Wall Street’s $44 billion, further bolstered investor confidence.

Meta Stock Performance (2025)

Meta’s Q1 earnings have reignited investor enthusiasm, but the road ahead isn’t without hurdles. Will the company’s AI investments and advertising prowess offset tariff and regulatory risks? Investors are betting on Meta’s resilience, but caution remains warranted. Keep an eye on Meta’s stock as it navigates this complex landscape.