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
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.