What's the META with Facebook's Q2 earnings?

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News extract from CNBC:

Screenshot of news from CNBC dated 28 July 2022 SGT

Facebook parent Meta reported a steeper-than-expected drop in revenue, missed on earnings and issued a surprisingly weak forecast, pointing to a second consecutive decline in year-over-year sales. The shares dropped 3.8% in extended trading.

Here’s how the company did:

  • Earnings:$2.46 per share vs. $2.59 per share expected, according to Refinitiv
  • Revenue:$28.82 billion vs. $28.94 billion expected, according to Refinitiv
  • Daily Active Users (DAUs):1.97 billion vs 1.96 billion expected, according to StreetAccount
  • Monthly Active Users (MAUs):2.93 vs 2.94 billion expected, according to StreetAccount
  • Average Revenue per User (ARPU):$9.82 vs. $9.83 expected, according to StreetAccount

Meta shares have lost about half their value since the beginning of the year, underscoring investor concern about the health of the company’s core online advertising business. That unit has been hurt by Apple’s iOS privacy update last year, limiting Meta’s ability to track users, and by a weakening economy that’s led some companies to slash their ad budgets.

My Muse

1 Day Chart of META as of 5.50pm SGT 28 Jul 2022

There will be concerns raised about social media companies that made money from advertising.  We should pay attention to Google, Amazon, Twitter and the likes.  Pre-market for META is already down almost 6%.  Coupled with a Q2 GDP announcement in less than 3 hours, Meta could be in for a very volatile day.  If the price drop is significant (high single-digit or double-digit percentage drop), there is a "3-day" rule for us to consider.  It is not an "absolute" rule that we "must" follow but following a volatile drop, it is better we give the stocks 3 days +/- before deciding to take a position.

Will Meta be able to recover to climb above $200?  Will this start the decline of the Meta empire?  Let us monitor accordingly.  For now, I remain a "user" of Meta's social media platforms and not an investor. 

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