META STOCK OUTLOOK:
- Meta Platforms, Facebook’s parent company, will announce quarterly results on Wednesday after the closing bell
- Analysts expect earnings per share of $2.58 on revenue of $28.28 billion
- If earnings and corporate guidance disappoints expectations, Netflix’s tragic fate could befall Facebook
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Meta Platforms (FB) stock prices have plummeted from their September 2021 highs, falling more than 50% from those levels, pressured by slowing growth in the business, privacy changes to Apple’s iOS, stronger competition, doubts about the metaverse venture and broad-based tech sector weakness amid rising interest rates and soaring inflation. The sell-off, however, picked up pace in early February after the company posted worse than anticipated Q4 2021 earnings[2], recorded its first-ever drop in daily user numbers and offered disappointing forward-looking commentary.
Meta will have a chance to redeem itself on Wednesday after the closing bell when it announces its Q1 2022 results. Investors expect earnings per share of $2.58 on revenue of $28.28 billion, but many analysts warn performance could underwhelm forecasts for the following reasons:
- Young people, Meta’s most lucrative advertising demographic, continue to leave Facebook and Instagram in droves, opting for more engaging video apps like TikTok
- Daily active users could trend lower as people begin to spend less time on social media platforms, with the global economy recovering from the pandemic and mobility rebounding sharply
- Meta has been struggling to monetize Reels videos (the product generates less revenue than Feeds and Stories)
- Metaverse, which faces a long road to profitability, is sucking away resources from the company’s bread and butter: Facebook and Instagram
- Apple and Google's pivot to stricter consumer privacy measures creates headwinds for ad pricing growth
Source: EarningsWhispers
