Meta Platforms' results expected to show effects of online ad spending challenges
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When Facebook parent Meta Platforms (NASDAQ:META) reports its second-quarter results after Wednesday's market close, investors will be looking for any evidence that will put the brakes on the social-networker's share big losses this year.
Wall Street analysts currently estimate that Meta (META) will report a profit of $2.55 a share on revenue of $29B for the quarter that ended in June. The company's report comes amid growing evidence of pressures and declining sales in the digital advertising market, which is a major source of revenue for Meta (META) and other social-media companies.
Signs of the online ad-spending issue becoming more than just a typical concern when last week, Snap (SNAP) gave such a disappointing quarterly report that the company's shares fell 40%. That performance led many analysts to begin to wonder if a similar poor outlook might come from Meta (META) with its second-quarter report.
Mizuho Securities analyst James Lee said Meta (META) is facing several "headwinds" that are likely to weigh on its growth prospects into 2023 "as the economy continues to slow and consumer spending remains strapped with inflation." As such, Lee estimates that Meta's (META) second-quarter revenue will decline by about 2% from a year ago, and the company's third-quarter sales will rise just 1% from the same period in 2021.
In addition to advertisers shifting their spending dollars elsewhere, Lee said Meta (META) is still adjusting to changes that Apple (AAPL) has made in its iOS privacy standards that are impacting the way ads are delivered to Facebook users.
On Tuesday, reports surfaced saying that Meta (META) was considering a significant number of layoffs as it expands its employee-performance expectations. Additionally, Meta (META) raised the price of its Quest 2 virtual reality headsets due to rising production costs.