Meta Platforms’ revenue declined, but Investors expected it.
For the first time since the beginning of its history as a public company, Meta Platforms Inc. (META) reported a year-on-year decline in revenue. The news led to a decrease in quotations, although Wall Street, in general, was ready for a drop in the company’s revenues. At the auction on July 28, the META stock was worth $160.72. Meta Platforms’ revenue declined by almost 1% year-on-year in the second quarter to $28.82 billion, failing to meet Wall Street forecasts. In addition, the company reported too weak an increase in the number of new accounts. The most recent information shows about 3.65 billion Meta Platforms users.
Meta Platforms has faced many problems that have reduced indicators in the past quarters. First of all, the growing competition with TikTok. Facebook Instagrammed Meta Platforms tried to make its video service analog, but it was by many opinion leaders and bloggers from Facebook and Instagram. Meta Platforms was also negatively affected by the change in targeting rules for Apple software users. A large part of the audience with which the company can no longer work according to the old rules. Second-quarter earnings plummeted as Meta Platforms continued to invest in new products such as Instagram Reels and Reality Labs (the virtual reality division).
Earnings per share dropped from $3.61 in the second quarter of 2021 to $2.46 in the last quarter, for which numbers are available. At the same time, management expects the decline in revenue to accelerate in the current quarter to $26—$28.5 billion. Revenue in the virtual reality segment of Reality Labs increased by 48% to $452 million, but an operating loss was $2.8 billion. Reality Labs’ revenue declined in the third quarter, indicating that Quest VR headsets are not selling as well as planned. In general, investors assumed that the results of Meta Platforms would be somewhat worse than last year’s because the decline in quotations after the announcement of the quarter results can be called moderate. Although the share price has gone down, the social media giant still has a tremendous price-to-earnings ratio (P/E) of 14, even though the share price has gone down.
