How Will Meta Platforms Stock React To Its Upcoming Earnings?
Meta Platforms (NASDAQ:META) is scheduled to release its earnings report on Wednesday, April 30, 2025. Historically, the stock’s reaction to earnings has been evenly split, with a 50% chance of a positive one-day return and a 50% chance of a negative one-day return. When positive, the median return has been 7.7%, while negative returns have had a median of 4.7%.
Current consensus estimates predict earnings per share (EPS) of $5.22 on revenue of $41.35 billion. This represents double-digit growth compared to the previous year’s $4.71 EPS on $36.45 billion in revenue.
For event-driven traders, understanding these historical patterns could offer a potential edge. There are two primary approaches:
- Pre-Earnings Positioning: Analyze the historical probability of different outcomes and establish a position before the earnings announcement.
- Post-Earnings Reaction Analysis: Examine the correlation between the immediate stock reaction and medium-term returns following past earnings releases, and then position accordingly after the results are announced.
Beyond short-term trading considerations, Meta’s fundamental financial health appears robust. The company currently holds a market capitalization of $1.4 trillion. Over the trailing twelve months, Meta generated $165 billion in revenue, achieving a strong operating profit of $69 billion and a net income of $62 billion.
That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
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Meta Platforms’ Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the last five years, with 10 positive and 10 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 50% of the time.
- Notably, this percentage increases to 55% if we consider data for the last 3 years instead of 5.
- Median of the 10 positive returns = 7.7%, and median of the 10 negative returns = -4.7%
Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
META 1D, 5D, & 21D Post Earnings Return
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
META Correlation Between 1D, 5D and 21D Historical Returns
Is There Any Correlation With Peer Earnings?
Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Meta Platforms stock compared with the stock performance of peers that reported earnings just before Meta Platforms. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
META Correlation With Peer Earnings
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