Top Line
Facebook parent Meta saw its stock tumble on Wednesday after second-quarter earnings results were lower than expected, as investors particularly panicked over the company’s weak revenue forecast and struggling online advertising business.
Some analysts have warned that Meta faces an “Everest-like uphill battle ahead”.
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Key Facts
Meta shares fell more than 3% shortly after the earnings announcement, trailing gains earlier in the session, when the stock rose more than 6% from earnings.
Meta reported quarterly revenue of $28.8 billion and earnings of $2.46 per share, compared to $28.9 billion and $2.59 per share expected by analysts, according to Refinitiv.
Meanwhile, Facebook’s parent company’s user growth 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 have warned that the company faces an “uphill battle” for the rest of the year, as its online advertising business continues to struggle due to Apple’s iOS privacy updates and a more challenging economic environment, which Affected advertising budget.
According to Refinitiv data, Meta slashed its revenue outlook for the third quarter, which is now between $26 billion and $28.5 billion — nearly $30.5 billion above analyst expectations.
Beyond its online advertising business, Meta is facing increasing competition for users from rival social media platforms like TikTok, while the company continues to spend billions of dollars on its augmented reality project, the Metaverse.
Important Quote:
Meta’s soft guidance talks of a “battle to climb up like Everest”, as Apple iOS privacy issues “remain front and center” and with the more challenging economic environment, They say Wedbush analyst Dan Ives. “The tech sector continues to split during June’s earnings season.”
Main background:
Meta has lost nearly half of its market value this year, with the stock down 50%, amid a broad market sell-off that has hit the tech sector particularly hard. Like other Big Tech companies, Meta has slowed hiring recently as fears of a recession continue to weigh on the markets. The company noted that it faced a “weak advertising demand environment” in the second quarter, citing “extensive macroeconomic uncertainty” as a driving factor. While most analysts remain optimistic about the company’s long-term growth, some remain cautious about the company’s “ability to maintain profits” amid a challenging environment in the short term.
Big numbers: $61 billion
Here’s what Meta cofounder Mark Zuckerberg is worth Forbes‘ Estimate.
Further reading:
Wall Street still loves Big Tech stocks: Analysts look ahead and up ahead of crucial earnings weekForbes,
Dow jumps 400 points after Fed rate hike by 75 basis pointsForbes,
IMF warns of ‘gloomy outlook’ for global economy, slashing growth projectionsForbes,
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