Meta shares pop 14%, reaching a 52-week high on guidance, sales increase

Meta shares rose more than 14 percent on Thursday, reaching a new high of 52 weeks, as analysts and investor digested the positive guidance provided for the next fiscal quarter, and the unexpected increase in sales for the first quarter 2023.

The company posted strong results on Wednesday. Both the top and bottom line were beaten. Meta reported first quarter earnings per share at $2.20, exceeding the consensus estimate by $2.03 and revenue of 28.65 billion dollars, versus the 27.65 billion dollars expected by analysts.

The company's first quarter numbers were boosted by the growth in China advertising spending. Chief Financial Officer Susan Li told analysts that the increase was "due in part to lower shipping costs and an easing of Covid lockdown" for these advertisers.

Mark Zuckerberg announced to the world that Facebook would be rebranded as Meta in October 2021, as the company pushed towards the metaverse.

via Reuters

Meta's rally also benefited from optimistic forecasts for the current quarter. The company anticipates that second-quarter revenues will range between $29.5 billion to $32 billion.

Analysts expect Meta to benefit from artificial intelligence, just as they do with other tech giants.

Morgan Stanley's Brian Nowak said Thursday that "developing more open-source models (including LLMs), and helping to create an open eco-system is another area of emphasis as an open eco-system should enable META stay at the forefront, and drive infrastructure efficiency with time," he wrote. Nowak was referring to large languages models used in artificial intelligence. Morgan Stanley has an overweight rating on Meta, and increased its price target to $300.

JPMorgan analyst Doug Anmuth stated in a note on Thursday that the earnings showed the company's commitment towards cost discipline, while driving an accelerating revenue growth in the near term. All while investing in artificial intelligence and metaverse. JPMorgan reaffirmed its overweight rating for Meta and increased its price target from $270 up to $305.

Meta shares have increased 74% in the past year.

This report was contributed by CNBC's Jonathan Vanian, Michael Bloom and Michael Bloom.