Facebook Meta Platforms Inc. is the latest tech giant to feel an economic pinch. On Wednesday, it reported its slowest sales growth in a decade and issued lukewarm revenue guidance.
Nonetheless, Meta’s stock FB jumped 13% Wednesday after the company formerly known as Facebook disclosed first-quarter earnings of $7.47 billion, or $2.72 a share, down from $9.5 billion, or $3.30 a share last year, on sales of $27.9 billion, up 7% from $26.2 billion a year ago.
Earnings beat the average forecast for profit of $2.56 a share but sales fell short of the consensus of $28.3 billion, according to analysts polled by FactSet.
Meta issued a second-quarter revenue forecast of between $28 billion to $30 billion, while analysts were forecasting $30.7 billion. Facebook executives have cited increased competition from services such as TikTok, and changes Apple Inc. AAPL made to its mobile operating system that make it more difficult for apps to track consumers in ads.
In a white paper published by Apple on Tuesday, its author, Kinshuk Jerath, a professor of business in the marketing division at Columbia Business School, concluded it would be speculative to claim billions of advertising dollars moved from companies like Meta to Apple because of Apple’s move.
“This outlook reflects a continuation of the trends impacting revenue growth in the first quarter, including softness in the back half of the first quarter that coincided with the war in Ukraine,” Meta Chief Financial Officer David Wehner said in a statement announcing the results. “Our guidance assumes foreign currency will be approximately a 3% headwind to year-over-year growth in the second quarter, based on current exchange rates.”
The mixedresults arrive on the heels of lighter-than-expected sales and earnings from Google parent Alphabet Inc. GOOGL GOOG on Tuesday, deepening concerns that companies dependent on advertising may face a rough patch with a war raging in Ukraine and inflation burning through the pocketbooks of consumers. Snap Inc.
warned of a “challenging operating environment” when it reported results last week.
Daily active users, or DAUs, a crucial metric for Meta’s growth globally, increased 4% to 1.96 billion, topping analyst expectations of 1.95 billion.
Meta’s stock has been among the worst in tech this year, plummeting 48% so far, while the broader S&P 500 index SPX has dipped 12% in 2022.