Topline
Facebook parent Meta saw its stock plunge in after-hours trading on Wednesday following second-quarter earnings results that came in below expectations, as investors were particularly spooked by the company’s weak revenue forecast and struggling online advertising business.
Some analysts warn that Meta faces an “Everest-like uphill battle ahead.”
Key Facts
Shares of Meta plunged over 3% immediately following the earnings announcement, paring back gains from earlier in the session, when the stock rose over 6% ahead of earnings.
Meta reported quarterly revenue of $28.8 billion and earnings of $2.46 per share, compared to the $28.9 billion and $2.59 per share expected by analysts, according to Refinitiv.
The Facebook parent company’s user growth, meanwhile, was largely in line with expectations, with the company reporting 1.97 billion daily active users and 2.93 billion monthly active users.
Several Wall Street analysts warned that the company faces an “uphill battle” for the rest of the year, as its online advertising business continues to struggle thanks to Apple’s iOS privacy update and a more challenging economic environment, which has hit ad budgets.
Meta slashed its revenue outlook for the third quarter, now forecasting between $26 billion and $28.5 billion—down from analyst expectations for around $30.5 billion, according to Refinitiv data.
Beyond its online ad business, Meta continues to face increased competition for users from the likes of rival social media platforms like TikTok, while the company has also continued to spend billions of dollars on its augmented reality project, the metaverse.
Crucial Quote:
Meta’s soft guidance speaks to an “Everest-like uphill battle ahead,” as Apple iOS privacy issues “continue to be front and center” along with a more challenging economic environment, says Wedbush analyst Dan Ives. “Bifurcation of tech space continues during June earnings season.”
Key Background:
Meta has lost roughly half of its market value this year, with the stock down 50%, amid the wider market selloff that has hit the tech sector especially hard. Like other Big Tech companies, Meta has recently slowed hiring as recession fears continue to grip markets. The company noted it faced “weak advertising demand environment” throughout the second quarter, citing the “broader macroeconomic uncertainty” as a driving factor. Though most analysts remain bullish about the company’s long-term growth, some remain cautious about the company’s “ability to sustain profits” amid a challenging environment in the short-term.
Big Number: $61 Billion
That’s how much Meta cofounder Mark Zuckerberg is worth, according to Forbes’ estimates.
Further Reading:
Wall Street Still Loves Big Tech Stocks: Analysts See Further Upside Ahead Of Crucial Earnings Week (Forbes)
Dow Jumps 400 Points After Fed Hikes Rates By 75 Basis Points (Forbes)
IMF Warns Of ‘Gloomy Outlook’ For Global Economy, Slashing Growth Estimates (Forbes)