Yuvraj and Eva Mathews

(Reuters) – Meta Platforms Inc, Facebook’s owner, is likely to announce its slowest quarter-to-quarter ad revenue growth since 2010, as companies reduce ad spend against the background of soaring inflation globally and the conflict in Ukraine.

If the Ukraine crisis continues, global advertising and marketing budgets may be further stretched. Analysts predict that Meta will issue a weak forecast for the current quarter.

According to data from Refinitiv, Meta’s advertising revenue will have increased 8.7% in its first quarter. This is the slowest growth since 2012 when it went public.

Wall Street analysts stated that Facebook (NASDAQ: ) might lose its hold on the global advertising market, even though digital advertising is more effective than traditional methods.

Meta’s predictions for a slowdown might also be read to indicate a decrease in Facebook’s brand power.” Hargreaves Sophie Lundyates (LON:), analyst, Lansdown

Meta’s market value has fallen nearly half since February 2, when Meta announced a decrease in Facebook users per day for the first-time and predicted a grim quarter.

Graphic: Meta’s ad sales growth since it went public in 2012 – https://graphics.reuters.com/META-ADVERTISEMENTS/dwpkrykrnvm/chart.png

THE CONTEXT

Google parent Alphabet, (NASDAQ:), provided some guidance on Tuesday. It cited the conflict in Ukraine to slow down YouTube advertising sales. Smaller rival Snap Inc (NYSE:) warned of inflationary pressures, shortages in labor and other economic problems that could impact ad revenues.

This timing couldn’t have been better for tech companies that rely on ad revenue as they also face policy changes at Apple (NASDAQ) and increasing competition from TikTok for ad dollars.

Mitchell Olsen assistant professor of Marketing at the University of Notre Dame stated that “The cost of acquiring customers via digital channels such as Facebook has increased, while the ability of targeting customers has fallen.”

Olsen said that this has led to many brand managers reducing their exposure on Facebook and reallocating their ads dollars across different platforms.

Graphic: Ad sales at tech giants Meta Platforms and Alphabet – https://graphics.reuters.com/TECH-ADVERTISING/klpyklnzxpg/chart.png

THE FUNDAMENTALS** Co to report a 7.8% rise in Q1 revenue to $28.20 billion, its slowest growth since 2012

** Earnings per share is estimated at $2.56

** Advertising revenue is expected to grow 8.7% to $27.66 billion

Graphic: Meta’s quarterly revenue for the last decade – https://graphics.reuters.com/META-RESULTS/zgpomlabkpd/chart.png

WALL ST. SENTIMENT

** 45 out of 63 analysts rate the stock “buy” or higher, while 16 have a “hold” rating and two rate it as a “sell” or lower

** The median price target is $325, down by $25 in the last three months

** FB trading at $173.94 currently

QUARTER-ENDING REFINITIVACTUAL BEAT, MMET

IBES ESTIMATE MISSENTED

Dec. 31 2021 3.84 3.67 Missed

Sep. 30 2021 3.19 3.22 Beat

Jun. 30 2021 3.03 3.61 Beat

Mar. 31 2021 2.37 3.30 Beat

Dec. 31 2020 3.22 3.88 Beat

Sep. 30 2020 1.91 2.40 Beat

Jun. 30 2020 1.39 1.80 Beat

Mar. 31 2020 1.75 1.71 Missed