Meta Works Its Age

The cracks are still there, though, even if investors choose to ignore them. Earnings per share of $2.72 came in above Wall Street’s forecast—but were bolstered by more than $9 billion in share repurchases in the quarter. Earnings per share declined 18% from a year earlier, while net income fell 21%. Meanwhile, revenue guidance for the second quarter implies the potential for year-over-year decline—not altogether surprising given the especially tough comparison in last year’s monster second quarter, but below what analysts were hoping for.

Facebook’s FB -3.32% daily active users declined on a sequential basis in the fourth quarter for the first time since the company started reporting the metric as a public company. And last month at an investor conference, chief financial officer David Wehner even admitted Meta’s legacy “blue” app had for a while been “at a point of more maturity” in North America, expecting user levels to “bounce” from quarter to quarter. That is playing out: Facebook grew its North American daily active user base in the first quarter on a sequential basis, though it now appears to be losing users on that basis in Europe.

Social media stocks over the last two weeks seem to be back to trading on performance rather than promise. Alphabet’s shares fell nearly 4% Wednesday after the company showed its vulnerability to macroeconomic factors and changes to Apple’s iOS operating system. Snap shares are down 8% since the company said last week annual sales growth in the second quarter would slow to an uncharacteristically low 20% to 25%. Twitter’s shares, meanwhile, are now trading 10% below Elon Musk’s purchase price, a testament not just to skepticism over the deal getting done, but also to how the platform will fare in Thursday’s earnings report.

AB Bernstein analyst Mark Shmulik said in a recent note that investors’ focus had “rightly” shifted back to core fundamentals, including the health of digital advertising, user engagement and profitability, calling the recent hysteria over nebulous concepts like the metaverse “silly season.”

Then again Mr. Shmulik also points out that in the online ad game right now, “there’s hair on every name.” Yes, blue Facebook has peaked, ad revenue growth is slowing and the metaverse is still a dream. But Snap is still a mega growth story only if you’re wearing its augmented reality glasses. And even moms seem to be tiring of Pinterest —its results Wednesday show it is still bleeding users on a year-on-year basis as of the first quarter. Last but certainly not least, Twitter is about to become a debt-laden business belonging to the world’s richest loose cannon.

The safest bet in social now might just be the most seasoned in the business. Having shed nearly $400 billion in market value over the last 12 months, Meta’s enterprise value came in at just 3.1 times forward sales as of Wednesday’s close—less than half the multiple of Snap and on par with Pinterest for the lowest multiple in the group.

Even in Silicon Valley, sometimes it pays to be the adult in the room.

Write to Laura Forman at laura.forman@wsj.com