Mark Zuckerberg, co-founder and CEO of Meta Platforms, in July 2021.
Kevin Dietsch | Getty Images News | Getty Images
Meta reviews third-quarter earnings on Wednesday after the bell.
Here’s what analysts expect:
- Earnings: $1.89 per share, based on Refinitiv
- Revenue: $27.38 billion, based on Refinitiv
- Daily Active Users (DAUs): 1.98 billion, based on StreetAccount
- Monthly Active Users (MAUs): 2.96 billion, based on StreetAccount
- Average Revenue per User (ARPU): $9.32, based on StreetAccount
Facebook’s guardian is contending with a broad slowdown in on-line advert spending, challenges from Apple’s iOS privateness replace and elevated competitors from TikTok. Add it up, and Meta is anticipated to put up its second straight quarter of declining gross sales.
Although Meta is investing closely in its Reels short-video service to steer customers away from TikTok, the product is within the early days of producing income and is not as profitable as Facebook’s core options, like Stories and the newsfeed.
Meta is attempting to make Reels extra enticing to advertisers and has introduced new advert codecs meant to offer companies enhanced choices for selling their merchandise via brief movies. The firm additionally lately debuted new methods for firms to promote on Instagram and Messenger, padding its total advert stock, which might probably bolster total gross sales.
Still, the inventory is down about 60% for the yr, greater than double the drop within the Nasdaq, and analysts are skeptical of the corporate’s prospects via this yr and into 2023.
Bank of America lately downgraded Meta from purchase to impartial and mentioned in a analysis notice that “we expect advertiser budget cuts in early 2023 to weigh on sentiment and drive added uncertainty” following the Apple replace and the “Reels transition.” The agency mentioned it expects 4% development in 2023, under Wall Street estimates of 9%, and sees “some downside risk to our estimates in a recession.”
Investors may also be targeted on Meta’s consumer numbers, which have stagnated. Most regarding are the consumer figures within the U.S. and Canada, its greatest area for income.
In the second quarter of 2022, Meta counted 197 million each day energetic customers in these two North American nations, down from 198 million in the identical quarter in 2020.
Meanwhile, Meta is investing billions of {dollars} a yr into the metaverse, the yet-to-be developed digital universe that folks can entry with digital actuality and augmented actuality headsets.
Earlier this week, Meta shareholder Brad Gerstner of Altimeter Capital wrote an open letter to Meta, lambasting the corporate for using too many employees and spending an excessive amount of cash on the metaverse.
The agency recommends that Meta scale back its head depend by 20% and trim its metaverse funding to a most of $5 billion a yr. Meta’s Reality Labs unit misplaced greater than $10 billion in 2021.
“Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world,” Gerstner wrote within the letter. “In short, Meta needs to get fit and focused.”
On Tuesday, Alphabet reported weaker-than-expected outcomes and mentioned YouTube promoting income dropped 2% from a yr earlier to $7.07 billion within the third quarter. Ruth Porat, Alphabet’s chief monetary officer, mentioned the decline “primarily reflects further pullbacks in advertiser spends.”
WATCH: Meta must concentrate on the core enterprise, not the Metaverse
Source: www.cnbc.com”