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The Street
The Street
Ian Krietzberg

Mark Zuckerberg's Facebook earnings call caused Elon Musk even more pain

Meta Platforms (META) -), the social media giant behind Facebook, Instagram and WhatsApp, posted strong third-quarter results after the bell Wednesday. Group revenues surged more than 23% to $34.15 billion while monthly active users across its "family of apps" jumped close to four billion. 

Meta additionally reported earnings of $4.39 per share, coming well above Street expectations of $3.70. Despite this, the stock tumbled in after-hours trading on notes of caution sounded by Susan Li, Meta's CFO. 

Li said that Meta is "seeing more volatility at the start of the quarter" due to the conflict in the Middle East. This softening in ad spend caused the company to broaden its guidance range to $36.5 billion to $40 billion, "to capture that uncertainty."

Related: Facebook whistleblower praises Mark Zuckerberg's recent troubles as a 'historic day'

"Historically, we have seen broader demand softness follow other regional conflicts in the past," Li said. "We've reflected the latest trends and advertiser reaction that we've seen into our Q4 outlook, which again, we think, reflects the greater uncertainty and volatility in the landscape ahead."

Meta shares, closing the day down around 4%, fell another 2.5% in pre-market trading Thursday and look set to open at around $292 each. 

The Tesla connection

Tesla (TSLA) -) shares have also been falling since the company reported earnings last week, a movement largely attributed to the company's falling gross margins and likely interest in more price cuts. 

But CEO Elon Musk blamed the company's struggles on macroeconomic factors — namely, high interest rates — that are outside of Tesla's control. 

Mark Zuckerberg, Meta's CEO, said in the company's earnings call Wednesday that Threads, its Twitter challenger, is "just under 100 million" monthly active users.

Bloomberg/Getty Images

Li's somewhat similar warning that fourth-quarter revenue would be dependent on macroeconomic factors, according to Gary Black, managing partner of The Future Fund, seemed to infect Tesla's stock as well. 

Tesla shares, closing the day down nearly 2%, were marked 0.9% lower in pre-market trading.

"Big (difference) between Tesla and Meta: Tesla missed on 3Q gross margins and earnings and the CEO signaled more price cuts for 4Q," Black wrote. "Meta beat for 3Q and guided in line for 4Q. Numbers matter."

Related: Why Tesla stock is crumbling — and where it could go next

The Street's Meta overreaction

Citing the strong earnings beat that Meta reported, Black said that the after-hours stock dip seems to be an "overreaction," an impression shared by Deepwater Management's Gene Munster. 

Munster, noting that the company's operating margin came in at 40%, about double what it was last year, said that "investors are getting concerned for little reason." 

Meta "guided December revenue up by about 2%, and that increased guidance factors in the 'softness' early in the quarter," he said. "My read is they could have raised estimates by more if not for the geopolitical headwind."

Meta's strong quarterly results came just a day after more than 40 U.S. state attorneys general sued the company, accusing it of exploiting young users by pushing addictive features that have resulted in broad psychological damage. 

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