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META Stock Falls as Zuckerberg Disappoints Wall Street

  • Meta Platforms (META) reported weaker-than-expected Q2 results.
  • The company's Q3 guidance also came in below analysts' average estimate.
  • Its Reality Labs division, which is developing its offerings for the metaverse, lost $2.8 billion last quarter.

 

META stock - META Stock Falls as Zuckerberg Disappoints Wall Street

Source: Blue Planet Studio / Shutterstock.com

Meta Platforms (NASDAQ:META) stock is slumping 4.5% in early trading after the company’s second-quarter results came in below analysts’ average estimates. Meta, formerly known as Facebook, also provided guidance that missed analysts’ mean outlook.

META Stock: Drilling Down on Q2 Results

The company generated Q2 earnings per share of $2.46, versus the average estimate of $2.59, and its Q2 revenue was slightly below the mean forecast.

As far as guidance is concerned, Meta expects to generate revenue of $25 billion to $28.5 billion, well below analysts’ average estimate of $30.3 billion. Also worth noting is that the firm’s operating income tumbled 32% year-over-year to $8.36 billion, while its net income sank 36% YOY to $6.69 billion.

The firm’s Reality Labs division, which is developing its offerings for the metaverse, lost $2.8 billion last quarter.

The company’s CFO, David Wehner, noted in a statement that the guidance “reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty.”

Analysts React Negatively to Meta’s Results

Many Wall Street analysts responded to Meta’s results by slashing their targets on its stock. For example, Sandler’s Thomas Champion cut his target on META stock to $190 from $220. In addition to weak macro ad trends, Meta is being hurt by changes to Apple’s (NASDAQ:AAPL) privacy policy and currency fluctuations, Champion reported.

Oppenheimer cut its price target on Meta to $190 from $305, while Credit Suisse decreased its target to $214 from $245.

FTC Files Lawsuit to Stop Acquisition of VR Firm Within

The Federal Trade Commission has asked a federal court to block Meta’s acquisition of Within, which focuses on developing virtual-reality services and experiences. The FTC’s case is that “Meta could have chosen to try to compete with Within on the merits,” but it decided to just buy the company instead. The lawsuit could negatively affect Meta’s efforts to develop its metaverse offerings.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.


Article printed from InvestorPlace Media, https://investorplace.com/2022/07/meta-stock-falls-as-zuckerberg-disappoints-wall-street/.

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