Meta Platforms
Meta has been languishing due to a variety of negative catalysts. These include Apple
Inside the Numbers
In Q2, Meta Platforms reported $2.49 in earnings per share which fell short of expectations of $2.59 per share. Revenue also fell short of expectations at $28.82 billion vs. $28.94 billion and came in 1% below last year.
Daily active users came in at 1.97 billion vs 1.96 billion, while monthly active users just missed at: 2.93 vs 2.94 billion. The average revenue per user also just fell short at $9.82 vs expectations of $9.83.
These misses were even after estimates had been cut along with share prices losing more than 50% of their value from the start of the year. Initial weakness was due to weakness in ad efficacy and now, there seems to be declining demand from advertisers due to the slowing economy.
Revenue in the second quarter fell almost 1% from a year earlier. Adding to weakness was its disappointing Q3 forecast due to weakness in ad spending among marketers with the company citing inflation and macroeconomic uncertainty.
In its conference call, the company said it would be reducing headcount as it focuses on cutting costs. According to CEO Mark Zuckerberg, "This is a period that demands more intensity and I expect us to get more done with fewer resources."
It's forecasting Q3 revenue between $26 billion and $28.5 billion, well short of expectations of $30.5 billion which equates to a decline between 2% and 11% from last year's Q3. The company's struggles are similar to other online platforms like Snap
The company is also focusing on Instagram Reels as it looks to take on Tiktok. The company said that Reels is now approaching $1 billion in revenue which shows its inability to monetize as effectively as its other products. In fact, more Reels growth would necessarily mean less revenue for other Facebook products.
