Meta sees first ever quarterly drop, misses estimates

Recession fears and competitive pressures are weighing on the digital ads sales of the social media giant.

Meta Platforms Inc has issued a gloomy forecast after recording its first-ever quarterly drop in revenue, with recession fears and competitive pressures weighing on its digital advertisement sales.

Shares of the Menlo Park, California-based company were down about 4.6 percent in extended trading.

The company said on Wednesday it expects third-quarter revenue to come in at $26bn to $28.5bn, which would make it a second year-over-year drop in a row. Analysts were expecting $30.52bn, according to IBES data from Refinitiv.

Total revenue, which consists almost entirely of ad sales, fell 1 percent to $28.8bn in the second quarter ended June 30, from $29.1bn last year. The figure slightly missed Wall Street’s projections of $28.9bn, according to Refinitiv.

The company, which operates the world’s largest social media platform, reported mixed results for user growth.

Monthly active users on flagship social network Facebook came in slightly under analyst expectations at 2.93 billion in the second quarter, an increase of 1 percent year-over-year, while daily active users handily beat estimates at 1.97 billion.

Like many global companies, Meta is facing some revenue pressure from the strong US dollar, as sales in foreign currencies amount to less in dollar terms. Meta said it expected a 6 percent revenue growth headwind in the third quarter, based on current exchange rates.

“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” Chief Executive Officer Mark Zuckerberg said on the earnings call. “The situation seems worse than it did a quarter ago.”

Agencies