Facebook parent company Meta Platforms (META) stock is down 5% after the technology giant
reported worse-than-expected earnings and issued weak forward guidance.
The company’s earnings per share came in at $2.46 U.S. compared to $2.59 U.S. that was
expected on Wall Street. Revenue totaled $28.82 billion U.S. versus $28.94 billion U.S. that was
expected, according to Refinitiv data.
Meta stock has lost about half its value this year as investors worry about the strength of the
company’s online advertising business, notably on the Facebook platform. That business unit
has been hurt by Apple’s iOS privacy update, which limits Meta’s ability to track users, and by a
weakening economy that’s led many companies to pullback their ad spending.
While its second-quarter results were disappointing, Meta Platforms also issued a disheartening
third-quarter forecast.
The company forecasts that revenue in the third quarter will be in a range of $26 billion U.S. to
$28.5 billion U.S, lower than the $30.5 billion U.S. average analyst estimate.
In addition to a slowdown in advertising revenue, Meta is also struggling with the growth of
video app TikTok, which is attracting more users and taking advertising market share.
Meta Platforms said that its headcount increased 32% from a year earlier to 83,553 in the
second quarter. However, the company indicated recently that it plans to slow the pace of hiring
in coming months.
A hefty amount of spending is going to Meta’s Reality Labs unit, which is responsible for
developing virtual reality and augmented reality technologies. That division lost $2.8 billion U.S.
in the second quarter.
Earlier this week, Meta raised the price of its Quest 2 virtual reality headset by $100 U.S., citing
rising production and shipping costs. Although Meta is currently the leader in selling virtual
reality headsets, the market is still small for the company compared to its online advertising.
Meta Platforms’ stock has fallen 50% this year and now trades at $169.58 U.S. per share.
