Meta Platforms Inc. is the latest technology giant to experience an economic crisis as Facebook’s parent company reported its slowest sales growth in a decade on Wednesday and issued cool revenue guidelines.
“Revenue tensions are likely to slow investment,” Meta CEO Mark Zuckerberg said in an online presentation with analysts late Wednesday.
However, shares of Meta FB jumped -3.32% to more than 18% in after-hours trading on Wednesday after the company, formerly known as Facebook, revealed first-quarter earnings of $ 7.47 billion, or $ 2.72 per share, down $ 9.5 billion or $ 3.30 per year share last year from sales of $ 27.9 billion, up 7% from $ 26.2 billion a year ago.
Earnings exceeded the average earnings forecast of $ 2.56 per share, but sales did not reach a consensus of $ 28.3 billion, according to analysts polled by FactSet.
Meta released second-quarter revenue of $ 28 billion to $ 30 billion, while analysts forecast $ 30.7 billion. Facebook executives cite inflation, supply chain problems, the war in Ukraine, European economically unfavorable winds, increased competition from services such as TikTok and changes in Apple Inc. AAPL, -0.15% made in the mobile operating system, which make it difficult for applications to track users in ads.
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In a white paper published by Apple on Tuesday, Kinshuk Jerat, a professor of business in the marketing department at Columbia Business School, concluded that it would be speculative to claim that billions of advertising dollars have been moved from companies like Meta to Apple because of Apple’s move. .
“This outlook reflects continuing trends affecting revenue growth in the first quarter, including softness in the back half of the first quarter that coincided with the war in Ukraine,” Meta chief financial officer David Wenner said in a statement announcing the results. “Our guidelines assume that the foreign currency will be approximately 3% of the wind for growth on an annual basis in the second quarter, based on current exchange rates.
In a webcast presentation, Zuckerberg acknowledged the impact of TikTok and Apple, but said Meta was confident in her videos with a short Reels form and artificial intelligence to address each company accordingly. He added that the company’s push towards the metaverse would also increase revenue, especially in advertising.
The mixed results come after lighter-than-expected sales and profits from Google’s parent, Alphabet Inc, GOOGL, -3.67% GOOG, -3.75% on Tuesday, deepening fears that advertising-dependent companies could face a difficult period with the raging war in Ukraine and inflation burning through consumers’ pockets. Snap Inc. SNAP, -5.58% warned of a “challenging operating environment” when it reported results last week, although shares of Pinterest Inc. PINS, -2.86% also rose after earnings on Wednesday.
Daily active users or DAU, a key indicator of Meta’s global growth, rose 4% to 1.96 billion, exceeding analysts’ expectations of 1.95 billion. The rise has largely reassured investors, who are openly worried about reduced user engagement on Facebook’s platforms.
“The growth of (DAU) is a good sign for Facebook, especially after the fourth quarter of 2021, when it experienced its first decline in DAU. But it’s also clear that Facebook is still struggling to attract new users, and it’s becoming increasingly difficult for Instagram to cope with weight loss, “said Evelyn Mitchell, an analyst at Insider Intelligence. “Most of the growth in both [monthly active users] and DAU in Q1 came from the rest of the world, not from the United States and Canada, which are delivering revenue at a better pace. “
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Meta shares were among the worst in technology this year, falling 48% so far, while the broader S&P 500 SPX index, + 0.21%, fell 12% in 2022.
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