Meta Platforms
FB
is set to report
first-quarter 2022 results
on Apr 27.
Meta expects total revenues between $27 billion and $29 billion for the first quarter of 2022.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $28.28 billion, indicating an increase of 8.06% from the year-ago quarter’s reported figure.
The consensus mark for first-quarter earnings is pegged at $2.54 per share, down 2.68% in the past 30 days, suggesting a decline of 23.03% from the figure reported in the year-ago quarter.
The company’s earnings beat the Zacks Consensus Estimate in the three of the trailing four quarters and missing the in the remaining one, the average surprise being 14.17%.
Meta Platforms, Inc. Price and EPS Surprise
Meta Platforms, Inc. price-eps-surprise
|
Meta Platforms, Inc. Quote
Let’s see how things are shaping up for the upcoming announcement.
Factors to Consider for Q1 Earnings
Usage of Meta’s services is expected to have remained steady in the first quarter. Undoubtedly, the company’s Family of Apps — Facebook, Instagram, Messenger and WhatsApp — is facing significant competition from the likes of TikTok,
Twitter
TWTR
and
Snap
SNAP
.
Moreover, Instagram’s ban in Russia is expected to have negatively impacted user as well as advertising revenue growth in the to-be-reported quarter. Notably, Russia accounted for 1.5% of Meta’s advertising dollars.
The Zacks Consensus Estimate for first-quarter MAUs worldwide is pegged at 2.972 billion, suggesting 4.17% growth from the figure reported in the year-ago quarter and 2% growth from the figure reported in the previous quarter.
DAUs worldwide are pegged at 1.955 billion, indicating 4.1% growth from the figure reported in the year-ago quarter and 1.3% growth from the figure reported in the previous quarter.
Menwhile, an improved ad-spending environment, as well as an accelerated digital shift, is expected to have benefited Meta’s ad revenues in the to-be-reported quarter. The company’s top line is likely to have gained from improving market share, driven by a growing user base and continuing innovation in ad products.
According to an e-Marketer report,
social network ad spending
will spike in 2022 and is expected to overtake search for the first time in history. This bodes well for Meta’s Facebook, and also for Twitter, Snap’s Snapchat and TikTok.
However, changes made by
Apple
AAPL
in its iOS have limited Meta’s ability to track user activity trend. Moreover, stiff competition from Google, Snap and Twitter for ad-dollars remains a headwind.
Apple’s iOS changes have made ad targeting difficult, which, in turn, has increased the cost of driving outcomes. Moreover, measuring these outcomes has also become difficult. Meta expects these factors to hurt advertising growth in the first quarter and throughout 2022.
In terms of competition, Snap is noteworthy, given its rising popularity among Gen Z, owing to the immersive experience offered by the platform.
Snap’s flagship platform, Snapchat, reaches 75% of the 13-34 year-old population of the United States, making it a more popular platform than Meta’s Facebook and Instagram among this demography.
These factors are expected to have affected Meta’s year-over-year advertising revenue growth rate in first-quarter 2022.
The consensus mark for this Zacks Rank #3 (Hold) company’s first-quarter 2022 advertising revenues is pegged at $27.76 billion, indicating 9.1% growth from the figure reported in the year-ago quarter. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
However, on a sequential basis, the consensus mark for advertising reflects 9.1% decline.
Markedly, advertising revenues increased 20.1% year over year to $32.64 billion and accounted for 96.9% of fourth-quarter revenues.
Key Q1 Developments
During the to-be-reported quarter, Meta introduced Family Center for parents. Family Center will help parents control what their teenage children experience across Meta technologies, especially in social media and VR. It will provide them with an educational hub where they will have access to expert opinions regarding how to introduce social media to children and instructions concerning how to use parental control.
Meta launched parental control in Facebook, Instagram and Occulus Quest Virtual reality set following an uproar stemming from a whistle-blower leaking internal documents. The document stated that the company knew that certain teenage girls were having issues on Instagram regarding posting pictures, particularly body images.
Regulatory headwinds increased for Meta after the company was sued by the Australian competition watchdog for posting fake celebrity advertisements on its social media platform. Moreover, Russian authorities launched a criminal investigation against Meta while prosecutors have asked a court to mark Meta as an extremist organization. Instagram has been banned in Russia since Mar 11.
Focus on developing the metaverse remained at the forefront as Meta announced its collaboration with VNTANA to bring 3D advertising to Facebook and Instagram. VNTANA has been granted access to Meta’s AR publishing application programming interface to automate 3D technology for ads.
This recent collaboration is a stepping stone for Meta to bring its advertising business to the metaverse. Brands will now be able to advertise 3D models of their products on Facebook and Instagram, creating a whole new way of interaction between customers and businesses.
Stay on top of upcoming earnings announcements with the
Zacks Earnings Calendar
.
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