Stock Groups

Facebook forecast points to possible revenue drop for the first time


Mark Zuckerberg is the Chairman and CEO of Facebook. He testified at an hearing held by House Financial Services Committee, Washington, on October 23rd 2019.

Erin Scott | Reuters

Facebook had not seen revenue growth in the single figures prior to the start of the year. The second quarter may see it shrink.

Facebook Parent shares may not be available. MetaExtended trading was up by 20% on Wednesday better-than-expected profitThe business of the company has stagnated and does not look to rebound for at least the second quarter.

Meta’s earnings report for its quarter ended January 31st gave guidance on revenue for the next period at $28 billion-30 billion. That is below the Refinitiv average analyst estimate which was $30.6 billion. The revenue range would be in the middle, with sales dropping from the 2nd quarter 2021 (which was $29.1billion).

The modest forecast comes after a quarterly growth rate of just 7%, which is the lowest annual growth rate in Facebook’s 10 year history. Facebook was experiencing a 50% increase in its user base a year ago, following a huge post-pandemic recovery.

Meta CEO spoke on Wednesday’s earnings call. Mark ZuckerbergThe slowdown can be attributed to both macro and internal factors.

Zuckerberg spoke out specifically about Facebook and said that there is an emphasis on short-term videos. This “drags on revenue” because the company doesn’t monetize its traditional ads as well. The company also addresses privacy issues. Apple’sAfter the acceleration that we witnessed during the pandemic, iOS has “softness” in ecommerce

You might like Snap GoogleRussia is also threatening Facebook with an invasion of Ukraine. 

Zuckerberg stated that “We have been blocked by Russia” and that he had decided to cease accepting advertising from Russian advertisers worldwide. The war has had a global impact on businesses.

Investors seem to have accepted the disappointment. The stock lost nearly half of its value by Wednesday night, owing to a major forecast error. February’s earnings report.

Facebook provided some positive news, however: The report’s profit figure included positive numbers such as the daily active users and the average revenue per user. These figures exceeded all estimates.

Analysts project that the second-half of this year will witness growth back to the teens.

WATCH: Facebook growing users is good but guidance is a concern