Facebook’s Parent company Meta shared their first quarter profits and it is safe to say, the numbers have surprised everyone. Despite having the slowest revenue growth since it went public around 10 years ago, the quantity of daily users exceeded Wall Street’s expectations. Meta’s shares went up to 18% in after-hours trading.
During January to March this year, the company earned around $7.47 billion or $2.72 per share. As compared to $9.5 billion or $3.30 per share during the same period last year, there has been a decrease of around 21%. The increase in revenue has been approximately 7% from $26.17 billion to $27.91 billion. For the major online advertising company which usually on sales growth in double digits, it is, without a doubt, the slowest growth rate in a decade.
According to a poll conducted by FactSet, the analysts we’re expecting earnings of around $2.56 per share on an average considering a revenue of $28.28 billion.
On the other hand, Google parent Alphabet showed contradictory results as per Wall Street’s expectations. The analysts reported on Monday that the earnings were disappointing. Even though Google reported a revenue growth slowdown as well, the impact for Meta was much lessened due to the increase it daily active users.
Jesse Cohen, Senior Analyst at Investing.com, explained that even though there was a stock surge in Meta, the overall report still suggests that the social media giant is struggling with slow revenue growth in an environment which includes reduced ad spending and current inflations.
Due to some recent privacy changes made by apple to its iPhone software iOS, it’s becoming harder for companies like Meta to track users for advertising purposes. This factor is also putting quite a pressure on the company’s revenue.
As of March 2022, number of daily active users on Facebook is around 1.96 billion. And even though it is an optimistic sign after facing a decline in the last quarter, Evelyn Mitchell (Insider intelligence analyst) revealed that most of the the increase is due to people outside the US and Canada, which does not make much money for the company.
