META STOCK VIEW:
- Meta Platforms, Facebook’s parent company, will announce quarterly results on Wednesday after the closing bell
- Analysts expect earnings per share of $2.58 for a result of $28.28 billion
- If revenue and corporate guidance disappoint expectations, Netflix’s tragic fate could befall Facebook
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Meta Platforms (FB) share prices have plummeted from highs in September 2021, falling more than 50% from those levels, weighed down by slower growth in the business, privacy changes to Apple’s iOS, stronger competition, doubts about metaverse ventures and the weakness of the broad-based technology sector amid rising interest rates and soaring inflation. Sales, however, rose in early February after the company posted worse than expected Q4 2021 earnings, recorded the first decline in the number of daily users and offers disappointing forward -looking reviews.
Meta will have a chance to redeem itself on Wednesday after the closing bell when it announces it S1 results 2022. Investors expect earnings per share of $ 2.58 at $ 28.28 billion in revenue, but many analysts give warning performance can be disappointing prediction for the following reasons:
- Young people, Meta is the most tolerable advertising demographicskeep leaving Facebook and Instagram en masse, opting for more engaging video apps like TikTok
- Daily active users may show a lower trend as people start spending less time on social media platforms, with the global economy recovering from the epidemic and mobility recovering sharply
- Meta has struggled to monetize Reels videos (products generate less revenue than Feeds and Stories)
- Metaverse, who faces a long road to profit, is inhaling sources from the company’s bread and butter: Facebook and Instagram
- Apple and Google’s pivot to stricter consumer privacy measures poses a problem for ad pricinging growth
WHAT WILL BE IMPORTANT FOR THE MARKET?
Merchants should pay attention to the growth of ad revenue and survey reviews, but more important is the number of daily active users. In Q4 2021, Facebook’s DAU totaled 1.929 billion, up 5% year -over -year, but down 0.1% quarter -over -quarter. The market did not like this sequential decline and the share price plunged more than 25% a day after the company released its financial statements with this information.
Looking ahead, if the DAU is unstable and retreats more than expected following Russia’s decision to ban Meta products in the country, FB shares could be affected, rivaling Netflix sales last week, when shares of the streaming service fell more than 35% after announcing the loss of 200,000 subscribers and issuing a weak guide.
For a long time, tech lovers have dominated multiples of higher valuations than the broader market because of the expectation that they can continue to provide strong revenue growth to shareholders regardless of the economic environment, but if their fortunes start to change, investors may think two times to pay a premium to own their shares.
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— Written by Diego Colman, Contributor