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.
Here are some key facts
Meta shares plunged more than 3% within minutes of the earnings announcement. This is a significant drop from gains earlier in the session when Meta rose above 6% before earnings.
Refinitiv.com reported Meta’s quarterly earnings and revenue of $28.8 Billion. That compares with the expected $28.9 and $2.59 billion, respectively.
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.
Meta faces increased competition from rival platforms such as TikTok for its users. The company also continues to invest billions in its augmented reality project the metaverse.
The most important 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, saysDan Ives is a Wedbush analyst. “Bifurcation of tech space continues during June earnings season.”
Meta’s stock has fallen 50% and roughly half of the company’s market value has been lost this year. This is in spite of the market selling that has ravaged the sector. Meta, like other Big Tech firms has cut back on hiring due to the continued grip of recession fears in 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 SME’ estimates.
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