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Meta Platforms' (META) Declining Global MAU to Hurt Q2 Earnings
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Meta Platforms (META - Free Report) global Monthly Active Users (MAU) is expected to be flat or down sequentially in the second quarter of 2022.
In the first quarter, Meta reported roughly 3.6 billion people used at least one of their family of apps — Facebook, Instagram, Messenger and WhatsApp. Facebook daily active users (DAU) were 1.96 billion, up by 4% or 82 million in the last reported quarter.
However, Europe DAUs and MAUs are expected to have declined in the second quarter of 2022 due to the loss of users in Russia following the government’s banning of Facebook and Instagram in the country. This is likely to have impacted Global MAU negatively.
Click here to know how Meta’s overall second-quarter performance is likely to be.
Meta Investing in AI to Support Ads Infrastructure
Continued slowdown in Meta’s online commerce vertical, which grew during the COVID-19 pandemic, might have negatively impacted revenues in the second quarter. The deceleration in growth is likely to have persisted due to the Russia-Ukraine war.
The war has heightened the impact of inflation that has reduced advertising demand both within Europe and outside the region. This, in turn, might have hampered Meta’s advertising revenues in the second quarter of 2022.
Ad targeting-related headwinds are expected to have hurt the ad-revenue growth rate in the to-be-reported quarter. It is worth mentioning that changes made by Apple (AAPL - Free Report) and Google in their mobile operating systems and browser platforms have limited Meta’s ability to track the user-activity trend.
Apple’s iOS changes have made ad targeting difficult, which, in turn, has increased the cost of driving outcomes. Measuring these outcomes has also become difficult. Meta expects these factors to hurt advertising growth in the second quarter and throughout 2022.
Despite the company facing issues in Europe, Instagram’s growing popularity in international markets, particularly in Asia, has been helping Meta expand its user base. Much of it can be attributed to the growing popularity of short-form videos — Reels on Instagram. Reels make up 20% of the time people spend on Instagram. This new feature has been attracting Gen-Z to the platform amid competition from Snap’s (SNAP - Free Report) Snapchat and Twitter .
Snap is a noteworthy competition, given its rising popularity among Gen Z owing to the immersive experience offered by the platform. Snapchat reaches 75% of the 13-34-year-old population of the United States, making it a bigger platform than Meta’s Facebook and Instagram in this demography.
Twitter’s unique platform, even though different from Instagram, has been gaining momentum among users of all age groups due to its openness, real-time content, conversational format and simplicity. It has been able to protect the security of users on its platform and thus boost trustworthiness.
In order to increase revenues in the second quarter, Meta has been growing video monetization, especially in short-form videos like Reels, evolving their ad systems to do more with less data that will aid in reducing legal woes, which have been costing the company huge amounts of capital, and investing heavily in AI and Machine Learning to support the ads infrastructure.
AI and Machine Learning are likely to help the company in providing privacy-enhancing technologies and drive ad ranking and measurement capabilities.
Meta has experienced a $3 billion operating loss from its Reality Labs business in the first quarter. Consequently, in the second quarter, Meta slowed down its investments in certain Reality Labs projects, which were costing the company a lot of capital as revenues from its primary source have been decreasing.
The company has been diversifying the investments in developing certain AI infrastructure, which will drive revenue growth across ad business and the metaverse in the long run. This is expected to have aided in reducing operating expenses and might have favored the bottom-line growth in the second quarter.
The consensus mark for second-quarter earnings stands at $2.51 per share, which has remained unchanged over the past 30 days, suggesting a decline of 30.47% from the figure reported in the year-ago quarter.
Image: Bigstock
Meta Platforms' (META) Declining Global MAU to Hurt Q2 Earnings
Meta Platforms (META - Free Report) global Monthly Active Users (MAU) is expected to be flat or down sequentially in the second quarter of 2022.
In the first quarter, Meta reported roughly 3.6 billion people used at least one of their family of apps — Facebook, Instagram, Messenger and WhatsApp. Facebook daily active users (DAU) were 1.96 billion, up by 4% or 82 million in the last reported quarter.
However, Europe DAUs and MAUs are expected to have declined in the second quarter of 2022 due to the loss of users in Russia following the government’s banning of Facebook and Instagram in the country. This is likely to have impacted Global MAU negatively.
Click here to know how Meta’s overall second-quarter performance is likely to be.
Meta Platforms, Inc. Price and EPS Surprise
Meta Platforms, Inc. price-eps-surprise | Meta Platforms, Inc. Quote
Meta Investing in AI to Support Ads Infrastructure
Continued slowdown in Meta’s online commerce vertical, which grew during the COVID-19 pandemic, might have negatively impacted revenues in the second quarter. The deceleration in growth is likely to have persisted due to the Russia-Ukraine war.
The war has heightened the impact of inflation that has reduced advertising demand both within Europe and outside the region. This, in turn, might have hampered Meta’s advertising revenues in the second quarter of 2022.
Ad targeting-related headwinds are expected to have hurt the ad-revenue growth rate in the to-be-reported quarter. It is worth mentioning that changes made by Apple (AAPL - Free Report) and Google in their mobile operating systems and browser platforms have limited Meta’s ability to track the user-activity trend.
Apple’s iOS changes have made ad targeting difficult, which, in turn, has increased the cost of driving outcomes. Measuring these outcomes has also become difficult. Meta expects these factors to hurt advertising growth in the second quarter and throughout 2022.
Despite the company facing issues in Europe, Instagram’s growing popularity in international markets, particularly in Asia, has been helping Meta expand its user base. Much of it can be attributed to the growing popularity of short-form videos — Reels on Instagram. Reels make up 20% of the time people spend on Instagram. This new feature has been attracting Gen-Z to the platform amid competition from Snap’s (SNAP - Free Report) Snapchat and Twitter .
Snap is a noteworthy competition, given its rising popularity among Gen Z owing to the immersive experience offered by the platform. Snapchat reaches 75% of the 13-34-year-old population of the United States, making it a bigger platform than Meta’s Facebook and Instagram in this demography.
Twitter’s unique platform, even though different from Instagram, has been gaining momentum among users of all age groups due to its openness, real-time content, conversational format and simplicity. It has been able to protect the security of users on its platform and thus boost trustworthiness.
In order to increase revenues in the second quarter, Meta has been growing video monetization, especially in short-form videos like Reels, evolving their ad systems to do more with less data that will aid in reducing legal woes, which have been costing the company huge amounts of capital, and investing heavily in AI and Machine Learning to support the ads infrastructure.
AI and Machine Learning are likely to help the company in providing privacy-enhancing technologies and drive ad ranking and measurement capabilities.
Meta has experienced a $3 billion operating loss from its Reality Labs business in the first quarter. Consequently, in the second quarter, Meta slowed down its investments in certain Reality Labs projects, which were costing the company a lot of capital as revenues from its primary source have been decreasing.
The company has been diversifying the investments in developing certain AI infrastructure, which will drive revenue growth across ad business and the metaverse in the long run. This is expected to have aided in reducing operating expenses and might have favored the bottom-line growth in the second quarter.
Meta currently carries Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus mark for second-quarter earnings stands at $2.51 per share, which has remained unchanged over the past 30 days, suggesting a decline of 30.47% from the figure reported in the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.