Major Contraction Likely for Meta Platforms’ Earnings

Key Takeaways

  • Meta Platforms Inc. (META)’s fourth-quarter EPS most likely declined to $2.20, a 40% drop from the previous-year quarter.
  • Analysts anticipate the social media firm’s internet revenue to drop 43% and income to fall 6% within the fourth quarter.
  • Meta beforehand admitted that pandemic-fueled development hasn’t been sustained and that it must reduce prices.
  • Analysts will decide whether or not the corporate’s present cost-cutting strategies, akin to important layoffs, elevated profitability.

Meta Platforms Inc. (META), the dad or mum firm of Fb, is predicted to report a 43% drop in its fourth-quarter internet revenue in contrast with the identical quarter the earlier yr. Shrinking promoting income and better prices will seemingly crush the tech firm’s earnings on Wednesday.

Meta’s earnings per share (EPS) are projected to fall 40% to $2.20 in contrast with the fourth quarter of 2021, in keeping with Seen Alpha. Complete income for the quarter seemingly will decline 6% versus the identical interval in 2021. This income quantity is in step with what Meta itself anticipated.

The corporate’s struggles have been outlined within the administration commentary accompanying its third-quarter earnings in October. At the moment, Meta stated it will be taking a look at methods to shrink headcount and consolidate infrastructure to chop again on prices.

Fb’s consumer development is slowing down underneath strain from different social media platforms akin to TikTok. Whereas the pandemic fueled development and investments into Fb, anticipated post-pandemic development did not fairly materialize. That led to Meta shedding 11,000 employees, or almost 13% of its workforce, only a few weeks after its third-quarter earnings have been launched.

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Moreover, current rate of interest hikes are making borrowing costlier. Tech corporations like Meta have needed to reduce prices wherever attainable to assist offset elevated spending to construct capability over the past couple of years.

All these elements have finished a quantity on Meta’s share value, which fell greater than 60% throughout 2022. Compared, the S&P 500 Communication Companies Sector Index declined nearly 40%.


META Key Stats

  Estimate fro This fall FY 2022 This fall FY 2021 This fall FY 2020
Adjusted Earnings Per Share ($)  2.20 3.67 3.88
Income ($B) 31.5 33.7 28.1
Month-to-month Lively Folks- Fb Household (B) 3.7 3.6 3.3

Supply: Seen Alpha

Key Metrics

Meta’s key metric, Month-to-month Lively Folks, for the Fb product household is seen rising considerably, to three.7 billion from 3.6 billion within the year-earlier quarter and above the 2020 fourth quarter within the early months of the pandemic, which helped enhance social media use. This metric is used to rely the variety of distinctive customers who visited a website inside the previous month. 

Meta wasn’t alone when it laid off 11,000 workers final November to rein in prices. Different tech corporations akin to Alphabet Inc. (GOOGL), Amazon Inc. (AMZN), and Apple Inc. (AAPL) are additionally dealing with headwinds to growth and can be reporting earnings this week as properly.