People take pictures of the new “Meta” sign on One Hacker Way in Menlo Park, as Facebook changes its company name to Meta in California on October 28, 2021.
Tayfun Coskun | Anadolu Agency | Getty Images
Meta will announce second quarter results after markets close on Wednesday.
This is what analysts expect.
- Income: $2.59 per share, according to Refinitiv
- Revenue: $28.94 billion, according to Refinitiv
- Daily Active Users (DAUs): 1.96 billion, according to StreetAccount
- Monthly Active Users (MAUs): 2.94 billion, according to StreetAccount
- Average revenue per user (ARPU): $9.83, according to StreetAccount
Meta-shares have lost about half their value since the beginning of the year, highlighting investor concerns about the health of the company’s core online advertising business. That unit was hurt last year by Apple’s iOS privacy update, which limited Meta’s ability to track users, and by a weakening economy that has led some companies to cut their advertising budgets.
Analysts expect Meta to report its first year-over-year sales decline, with sales expected to fall 0.5%. While the rest of the year isn’t expected to be as bad as the second quarter, analysts are still forecasting tepid 5.6% growth for 2022 for a company that has never seen 20% annual growth in its 10 years as a publicly traded company. has had .
Meta can be the beneficiary of low expectations.
Last week, Snap and Twitter reported disappointing second-quarter results, with executives citing economic and mobile platform challenges that have permeated the online advertising market. The mood soured so much that shares of Alphabet and Microsoft rose on Wednesday, even as both companies missed analysts’ estimates on the top and bottom lines.
Microsoft said “reductions in ad spend” in the quarter resulted in a loss of more than $100 million in its online advertising business that powers products like LinkedIn and Bing Search. At Alphabet, YouTube’s growth slowed to below 5% from a year earlier, and CFO Ruth Porat said advertisers are pulling out due to “uncertainty about a number of factors.”
For Meta, the story goes far beyond the economy.
Instagram is coming under increasing pressure from short video app TikTok. Meta has responded by pushing Instagram’s Reels feature, which algorithmically shows short videos to users.
That shift has come under scrutiny, including from famed sisters Kylie Jenner and Kim Kardashian, who criticized the app’s new direction this week. Instagram head Adam Mosseri responded indirectly by saying in a video on Twitter that Meta is working on improving the app. While photos will continue to play an important role, he said “Instagram will increasingly become video over time,” due to changing user habits favoring video.
Meanwhile, Meta continues to spend billions of dollars quarterly on the metaverse, a digital world accessed through virtual reality and augmented reality devices. The company’s Reality Labs unit, which develops the metaverse, lost $2.96 billion in the first quarter.
Earlier this week, Meta increased the price of its Quest 2 VR headset by $100, citing rising production and shipping costs. While Meta is currently the leader in VR headset sales, that market is still small compared to mobile advertising.
Executives will discuss the results with analysts via a webcast beginning at 5 p.m. ET.
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