Meta will report fourth-quarter results after the bell

Meta reports fourth-quarter results on Wednesday as the company tries to reverse a slide that has pushed the stock down 64% over the past year.

What analysts expect:

• Merits: $2.22 per share, according to Refinitiv
• Revenue: According to Refinitiv, $31.53 billion is expected
• Daily Active Users (DAUs): According to StreetAccount, 1.99 billion is expected
• Monthly Active Users (MAUs): 2.98 billion expected, according to StreetAccount
• Average revenue per user (ARPU): According to StreetAccount, $10.63 is expected

Meta’s revenue is expected to decline for the third straight quarter, underscoring the challenges the social media company faces as economic uncertainty prompts companies to scale back digital advertising spend and pause campaigns.

Analysts expect the Facebook parent to report a more than 6% drop in revenue for the fourth quarter, and they’re forecasting another quarterly decline before growth picks up later this year.

While the stock market started to recover from a brutal 2022 in January, economic forecasts are still pointing to a rather bleak 2023, which could mean ongoing problems for the online advertising market. A recent Cowen survey of 50 ad buyers found that companies plan to increase their ad spend by just 3.3% in 2023, which the investment bank says is “the weakest outlook for ad growth in five years.”

On Tuesday, Snap reported fourth-quarter sales that missed estimates, sending shares plummeting in extended trading. The company also said its “internal guidance” calls for a first-quarter revenue decline of between 2% and 10%.

While much smaller than Meta, Snap faces some of the same challenges, including a slowdown in online ad spend, increasing competition from TikTok, and weaker targeted advertising due to apples 2021 iOS privacy update. alphabet and Amazon will summarize earnings reports from major online advertising platforms on Thursday, followed by Pinterest next week.

In November, Meta announced it would lay off over 11,000 employees, or 13% of the workforce, as part of the company’s cost-cutting plans.

“We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through the first quarter,” said CEO Mark Zuckerberg in a letter to employees back then.

The past year has also been marred by Zuckerberg’s costly efforts to sell off Wall Street for a plan to align the company with the metaverse’s yet-to-be-developed world. Zuckerberg said the metaverse, which would include virtual reality and augmented reality technologies, could represent the next big way people interact.

The big bet has frustrated investors, who worry the company is focusing too much on a futuristic endeavor while its core ad business struggles to revive growth. Meta’s Reality Labs unit, home of the Metaverse Ambitions, lost nearly $9.4 billion in the first three quarters of 2022.

Analysts expect Reality Labs to report an operating loss of $4.36 billion on revenue of $715.1 million in the fourth quarter, according to StreetAccount. Meta said last quarter that “reality labs’ operating losses will increase significantly year over year in 2023.”

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