Facebook parent Meta reports third-quarter earnings after the bell Wednesday
Mark Zuckerberg, co-founder and CEO of Meta Platforms, in July 2021.
Kevin Dietsch | Getty Images News | Getty Images
Meta reports third-quarter earnings on Wednesday after the bell.
Here’s what analysts are expecting:
- Earnings: $1.89 per share, according to Refinitiv
- Revenue: $27.38 billion, according to Refinitiv
- Daily Active Users (DAUs): 1.98 billion, according to StreetAccount
- Monthly Active Users (MAUs): 2.96 billion, according to StreetAccount
- Average Revenue per User (ARPU): $9.32, according to StreetAccount
Facebook’s parent is contending with a broad slowdown in online ad spending, challenges from Apple’s iOS privacy update and increased competition from TikTok. Add it up, and Meta is expected to post its second straight quarter of declining sales.
Although Meta is investing heavily in its Reels short-video service to steer users away from TikTok, the product is in the early days of generating revenue and isn’t as lucrative as Facebook’s core features, like Stories and the newsfeed.
Meta is trying to make Reels more attractive to advertisers and has announced new ad formats intended to give businesses enhanced options for promoting their products through short videos. The company also recently debuted new ways for companies to advertise on Instagram and Messenger, padding its overall ad inventory, which could potentially bolster overall sales.
Still, the stock is down about 60% for the year, more than double the drop in the Nasdaq, and analysts are skeptical of the company’s prospects through this year and into 2023.
Bank of America recently downgraded Meta from buy to neutral and said in a research note that “we expect advertiser budget cuts in early 2023 to weigh on sentiment and drive added uncertainty” following the Apple update and the “Reels transition.” The firm said it expects 4% growth in 2023, below Wall Street estimates of 9%, and sees “some downside risk to our estimates in a recession.”
Investors will also be focused on Meta’s user numbers, which have stagnated. Most concerning are the user figures in the U.S. and Canada, its biggest region for revenue.
In the second quarter of 2022, Meta counted 197 million daily active users in those two North American countries, down from 198 million in the same quarter in 2020.
Meanwhile, Meta is investing billions of dollars a year into the metaverse, the yet-to-be developed digital universe that people can access with virtual reality and augmented reality headsets.
Earlier this week, Meta shareholder Brad Gerstner of Altimeter Capital wrote an open letter to Meta, lambasting the company for employing too many workers and spending too much money on the metaverse.
The firm recommends that Meta reduce its head count by 20% and trim its metaverse investment to a maximum of $5 billion a year. Meta’s Reality Labs unit lost more 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 in the letter. “In short, Meta needs to get fit and focused.”
On Tuesday, Alphabet reported weaker-than-expected results and said YouTube advertising revenue dropped 2% from a year earlier to $7.07 billion in the third quarter. Ruth Porat, Alphabet’s chief financial officer, said the decline “primarily reflects further pullbacks in advertiser spends.”
WATCH: Meta needs to focus on the core business, not the Metaverse
The photo illustration shows the Bitcoin cryptocurrency on November 12, 2024 in Shanghai, China.
Vcg | Visual China Group | Getty Images
The price of bitcoin leapt back above $100,000 to start the first full trading week of the new year.
The flagship cryptocurrency was last higher by about 4% at $102,234, according to Coin Metrics. The broader crypto market, as measured by the CoinDesk 20 index, gained more than 3%. Bitcoin and ether are coming off their best weeks since Dec. 6, while Solana had its best week since Nov. 22.
“Overall, we are in a bullish environment and traders appear to be risk-on as we head into the new year,” Mario Jurina, CEO at crypto swaps platform Jumper.Exchange. “With Trump’s election set to be certified today, and January often being a bullish month — six of the past 10 years saw positive price action — it’s no wonder markets are moving upward.”
Bitcoin rises above $100,000 to start the week
The moves in crypto coincided with a rebound in tech stocks as Nvidia and shares of other chip names jumped. The tech-heavy Nasdaq was last higher by about 1.7%.
Crypto stocks Coinbase and MicroStrategy advanced nearly 6% and 5%, respectively. MicroStrategy Monday morning reported it has purchased another 1,070 bitcoins for about $101 million, bringing its total bitcoin holdings to 447,470.
Activity is coming back into the crypto market after a post-election rally that was driven by promises of a more supportive regulatory environment. The optimism sent prices rocketing for weeks before cooling at the end of the year. The price of bitcoin is expected to roughly double under the new administration this year, with some price predictions, like Fundstrat’s Tom Lee’s, being as high as $250,000.
Jakub Porzyck | Nurphoto | Getty Images
Global semiconductor stocks climbed on Monday after contract electronics giant Foxconn announced record fourth-quarter revenues, suggesting the artificial intelligence boom has far more room to run.
Hon Hai Precision Industry, which does business as Foxconn internationally, said in a Sunday statement that the company’s fourth-quarter revenue totaled 2.1 trillion New Taiwan dollars ($63.9 billion), growing 15% year-over-year.
Foxconn — which is a supplier to Apple — also set a record, posting the highest fourth-quarter revenue ever in company history, according to the statement.
The firm’s bumper revenue performance was driven by growth in its cloud and networking products — which includes AI servers like those designed by the likes of chipmaker Nvidia — and components and other products segments.
Computing products and smart consumer electronics — which numbers iPhone and other smartphones — saw “slight declines,” Foxconn said.
Shares of several semiconductor firms across Asia, Europe and the U.S. rose, as a result.
In Asia, TSMC hit a record high Monday and closed 1.9% higher in Taiwan.
The largest semiconductor manufacturer globally, TSMC produces chips for the likes of AMD and Nvidia.
Other Asian chip firms also logged share price gains — South Korea’s SK Hynix and Samsung rose nearly 10% and 4%, respectively.
In Europe, globally critical semiconductor equipment firm ASML saw its shares jump almost 6%, while fellow Dutch chip company ASMI’s stock rose almost 5%. Germany’s Infineon surged more than 6%.
Paris-listed shares of European contract chipmaker STMicroelectronics rose nearly 6%.
Stateside, Nvidia got a boost from the Foxconn numbers, climbing 2% in U.S. premarket trading.
Also boosting chip stocks on Monday was Microsoft’s announcement at the end of last week about plans to invest $80 billion in 2025 on data centers that can handle AI workloads.
Microsoft is one of several tech giants splurging on GPUs (graphics processing units) from Nvidia to train and run the most advanced AI models.
AMD, Nvidia’s closest rival, rose 3% in pre-market trading Monday, while fellow U.S. chip firms Qualcomm and Broadcom both climbed almost 2%.
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