For Internet leaders' upcoming results, it's all about the consumer
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As the next earnings season approaches, consumer demand and engagement are seen as top issues that will have an impact on what major Internet companies such as Meta Platforms (NASDAQ:META) and Alphabet (NASDAQ:GOOG) have to say about their recent business periods.
That's the assessment of Citi analyst Ronald Josey, who said conversations with advertisers suggest that there is a "fluid environment" in the ad market for Internet companies and heading into the next back-to-school season.
With regards to Alphabet (GOOG), Josey said broader trends that caused the company to recently say it was slowing down its hiring plans will be of interest. Josey said that Alphabet's (GOOG) search business should also get attention as investors will be watching for any early signs that ad spending will be slowing down, and that it remains "one of the best positioned companies across the Internet sector."
Josey, who has a buy rating on Alphabet's (GOOG) shares, lowered his price target on the company's stock to $2,900 a share from $3,175.
Josey said that expectations for Facebook parent Meta (META) are "relatively muted" right now, due in part to what is a typically tough season for ad revenue comparisons, and rising inflation that has impacted operations over the past quarter.
Among the issues that investors are likely to key in on are, Facebook and Instagram's approach to content delivery and how the company has made progress with monetizing its Reels short video offerings. Josey has a buy rating on Meta's (META) stock and trimmed his price target on the company's stock to $270 a share from $300.
With regards to Snap (NYSE:SNAP), which reports its second quarter on July 21, Josey said daily average user [DAU] growth and engagement, as well as progress on monetizing items like Snapchat Plus will be key for investors. Josey said he is looking for Snap (SNAP) to say it added 9.9M DAUs, to give it approximately 342 million DAUs during the quarter, and that its revenue grew almost 18% from a year ago, to $1.16B.
On Thursday, Morgan Stanley analysts led by Brian Nowak said that trends in the second quarter showed declines in usage of Meta's (META) Facebook and Instagram, but gains in ByteDance's (BDNCE) Tik Tok and Google's (GOOG) YouTube.