Facebook owner meta pads (META) is set to report quarterly results that should provide a clearer glimpse into ad spend, the primary source of revenue for all social media companies. The Meta earnings report is due out late Wednesday.
The lack of clarity about ad spending is a reason why shares of Meta and other social media companies have fallen over the past year. This includes Explode, Explode (pop, explode) Etsy (ETSY) and Pinterest (pins).
After its quarterly earnings report on Friday, Snap saw its shares plummet. It missed estimates due to the weak advertising market. Snapchat’s father also declined to give guidance for the third quarter. Additionally, Snap said it would “significantly slow our hiring rate, as well as our operating expense growth rate.”
Snap stock collapsed 39% on Friday, while Meta stock fell 7.6% that day. Meta shares rose 3% to 164.10 during morning trading in the stock market today.
Costly transformation into Metaverse
Meta is undergoing a major and costly transformation from social networks to the metaverse. It faces several other challenges that are likely to worry analysts when the definition earnings report is published.
For example, Meta continues to see a decline in revenue due to apple (AAPL) Change the iPhone operating system to reduce ad tracking. It also faces increased competition from TikTok and continues to come under pressure due to antitrust allegations from Congress.
At the same time, decisions about advertising spending are still in flux. Many small and medium businesses are considering creating new channels away from Meta for the first time.
“Meta faces a challenging economic environment and a horrific geopolitical landscape,” Monis Crispy Hardt analyst Brian White wrote in a note to clients. “Given the sensitivity of advertising campaigns to the fluctuations of the economy, we expect digital ad spending to come under severe pressure.”
What Analysts Expect From Profile Earnings
Analysts expect Facebook to report adjusted income of $2.54 per share, down 30% from last year’s quarter. This is the fourth consecutive quarter of earnings slowdown. Revenue estimate is $28.9 billion, down slightly from $29.1 billion a year ago.
In order to support profits, Meta has reduced operating expenses.
In late June, several media outlets reported that Meta warned employees to prepare for a tough second half as it deals with pressure on its core advertising business. CEO Mark Zuckerberg said he expects one of the worst downturns in modern history.
In a separate note leaked to the press, chief product Chris Cox said Meta will need to perform flawlessly in an environment where growth is slowing.
Meta stock is down 22% since the first quarter results were announced.
Bank of America analyst Justin Post wrote that potential positives in the second-quarter conference call “could include more stability than expected in the third-quarter outlook, optimism about the reels’ monetization slope, progress in ad targeting since the first quarter, and evidence of slowing spending on Metaverse.” .”
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