Facebook parent Meta set to report Q2 earnings after the bell

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  • Meta shares have lost about half their value this year as marketers pull back on ad spending.
  • The company’s online ad business is getting hit by Apple’s iOS privacy update and a tough economy.
  • Competitors Snap and Twitter reported disappointing second-quarter earnings, and Alphabet missed estimates in its announcement on Tuesday.

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Meta will announce second-quarter results after markets close on Wednesday.

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Here is what analysts are expecting.

  • Earnings: $2.59 per share, according to Refinitiv
  • Revenue: $28.94 billion, according to Refinitiv
  • Daily Active Users (DAUs): 1.96 billion, according to StreetAccount
  • Monthly Active Users (MAUs): 2.94 billion, according to StreetAccount
  • Average Revenue per User (ARPU): $9.83, according to StreetAccount

Meta shares have lost about half their value since the beginning of the year, underscoring investor concern about the health of the company’s core online advertising business. That unit has been hurt by Apple’s iOS privacy update last year, limiting Meta’s ability to track users, and by a weakening economy that’s led some companies to slash their ad budgets.

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Analysts expect Meta to report its first ever year-over-year revenue decline, with sales projected to slip 0.5%. While the rest of the year isnt expected to be as bad as the second quarter, analysts are still forecasting tepid growth of 5.6% for 2022 for a company that’s never had annual growth shy of 20% in its 10 years as a public company .

Meta could be the beneficiary of low expectations.

Last week, Snap and Twitter reported disappointing second-quarter results, and executives cited economic and mobile platform challenges that have permeated the online ad market. The mood soured so much that shares of Alphabet and Microsoft rose on Wednesday even though both companies missed analysts’ estimates on the top and bottom lines.

Microsoft said “reductions in advertising spend” in the quarter resulted in more than a $100 million loss in its online ad business that powers products like LinkedIn and Bing search. At Alphabet, YouTube’s growth slowed to below 5% from a year earlier, and CFO Ruth Porat said advertisers are pulling back due to “uncertainty about a number of factors.”

For Meta, the story goes well beyond the economy.

Instagram is coming under increased pressure from short video app TikTok. Meta has responded by pushing Instagram’s Reels feature, which algorithmically surfaces short videos to users.

That shift has come under scrutiny, including from celebrity sisters Kylie Jenner and Kim Kardashian, who criticized the app’s new direction this week. Instagram head Adam Mosseri indirectly responded by saying in a video shared on Twitter that Meta is working to improve the app. While photos will continue playing a major role, he said “more and more of Instagram is going to become video over time,” because of changing user habits that favor video.

Meanwhile, Meta continues to spend billions of dollars a quarter on the metaverse, a digital world that can be accessed via virtual reality and augmented reality devices. The company’s Reality Labs unit, which is developing the metaverse, lost $2.96 billion in the first quarter.

Earlier this week, Meta raised the price of its Quest 2 VR headset by $100, citing rising production and shipping costs. Although Meta is currently the leader in selling VR headsets, that market is still tiny compared to mobile advertising.

Executives will discuss the results with analysts on a webcast starting at 5:00 pm ET.

WATCH: Small company named Meta sues Zuckerberg’s behemoth


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