Facebook owner Meta Platforms reported second-quarter results late Wednesday that missed estimates and also reported its first quarterly revenue decline. The Meta earnings report caused the stock to fall.
The company reported adjusted earnings of $2.46 a share on revenue of $28.8 billion. Analysts expected Meta to report earnings of $2.54 a share on revenue of $29 billion, according to FactSet.
It was the first time Meta reported its first quarterly decline from the year-ago period, down from $29 billion. Its revenue outlook also missed expectations.
For its third quarter, Meta expects revenue in the range of $26 billion to $28.5 billion. That's below FactSet estimates of $30.4 billion. It reported 1.97 billion daily active users, up 3%.
"The outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty," Meta Chief Financial Officer David Wehner said in written remarks with the Meta earnings release.
Meta Stock Drops After Hours
Meta stock dropped 2.8% to 164.77, during after-hours trading on the stock market today.
"We're putting increased energy and focus around our key company priorities that unlock both near and long term opportunities for Meta and the people and businesses that use our services," Chief Executive Mark Zuckerberg said in the earnings release.
In late June, various media outlets reported that Meta had warned employees to brace for a tough second half. The company is coping with pressure on its core ads business. Zuckerberg said he anticipates one of the worst downturns in recent history.
In a memo leaked to the press, Chief Product Officer Chris Cox said Meta needs to execute flawlessly amid slower growth. And CFO Wehner added in the news release: "We have reduced our hiring and overall expense growth plans this year to account for the more challenging operating environment while continuing to direct resources toward our company priorities."
Meta Earnings And Costly Shift Into The Metaverse
Meta is undergoing a major and costly shift from social networking to the metaverse. It faces several other challenges as well.
For example, Meta continues to see revenue declines due to Apple changing its iPhone operating system to reduce ad tracking. It also faces increased competition from TikTok and remains under pressure over allegations of antitrust from Congress.
In order to shore up profit, Meta has been cutting back on operating expenses.
"We expect 2022 total expenses to be in the range of $85 billion to $88 billion, lowered from our prior outlook of $87 billion to $92 billion," CFO Wehner went on to say.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
