By Senad Karaahmetovic
Shares of Meta Platforms (NASDAQ:META) are down more than 5% in premarket trading Thursday after the company reported Q2 earnings and revenue that missed consensus estimates and issued a disappointing forecast.
META reported a Q2 EPS of $2.46, missing the consensus projection of $2.59 per share, according to Refinitiv. Revenue came in at $28.82 billion, below the analyst consensus of $28.94 billion.
The company reported 1.97 billion daily active users (DAUs) in the quarter, just above the expected 1.96 billion. The number of monthly active users (MAUs) stood at 2.93 billion, almost in line with the estimated 2.94 billion.
The Facebook owner generated an average revenue per user (ARPU) of $9.82, while analysts were looking for $9.83 per share. Its second-quarter operating profit margin fell to 29% from 43% as costs rose sharply and revenue dipped.
Meta’s headcount rose 32% year-over-year to 83,553, even though the company previously said it planned to slow its hiring efforts. The company’s Q2 operating profit margin was down to 29% from 43% amid higher costs and declining revenue.
Meta Platforms expects Q3 revenue to be in the range of $26 billion to $28.5 billion, missing the consensus projection of $30.32 billion. The tech giant now expects its FY total expenses in 2022 to be in the range of $85 billion to $88 billion, down from the previous forecast of $87 billion to $92 billion.
The company also said it expects FY capital expenditure in the range of $30 billion to $34 billion, up from an earlier forecast of $29 billion to $34 billion, while analysts were looking for $28.91 billion.
The weaker-than-expected outlook comes due to the macroeconomic backdrop, rather than Apply’s privacy changes or competition from TikTok, though it is likely that both factors played a role.
Meta also cited a “continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty.”
A Citi analyst cut the price target on Meta to $222 from $270 on macro headwinds but sees strong potential in reels usage, which “continues to thrive".
“While we lower our revenue and profitability projections materially given these headwinds, we believe Meta’s investments in content discovery, AI, and Reels along with a greater focus on investment spending positions it well for when ad demand returns,” the analyst told clients in a note.
An Evercore ISI analyst also slashed the price target as he went from $280 to $240. However, he also remains positive on META stock.
“We believe META will work through the Macro challenges as well as any other major ad platform (except Google), and its AI-driven product investments along with its massive reach and frequency will allow it to continue to improve its value proposition to advertisers. An effective META post-privacy ad attribution model is a When not an IF,” he wrote in a research note.
The analyst sees better days for Meta starting from Q4 or H1 2023.