Shares of Meta Platforms Inc. ticked lower on Thursday’s pre-market session after delivering the first-ever quarterly revenue decline as inflation throttles advertisement sales.
The California-based technology company slipped 4.65% or 7.88 points to $161.70 per share. Accordingly, this downward movement slashed the firm’s 6.55% upswing on Wednesday.
Meta Platforms, which operates the world’s largest social media platform, reported sales of $28.82 billion, declining 1.00% year-over-year. This second-quarter result also came in lower than the $28.94 billion expected.
Moreover, the Facebook owner published earnings of $2.46 per share, lower than the average market estimate of $2.59.
Then, monthly active users on the flagship social network posted 2.93 billion. It is slightly under the analysts’ consensus of 2.94 billion.
Meta’s troubling results followed a trend initiated last week by rivals Snap and Twitter. Social media companies reported disappointing second-quarter numbers. Eventually, executives cited economic and mobile platform challenges that have permeated the online ad market. Then, like many global companies, the social media giant faced revenue pressure from the strong dollar.
Consequently, shares of the firm have lost about half their value since the beginning of the year. This downturn underscored investor concern about the health of the company’s core online advertising business. Subsequently, the ad unit reflected the impact of Apple’s iOS privacy update last year, limiting Meta’s ability to track users.
Meta forecasts a decline in Q3 sales
Furthermore, Meta platforms anticipated third-quarter revenue to decline in the range of $26.00 billion and $28.50 billion. This forecast would translate to a projected decline of between 2.00% and 11.00% from a year ago.
Thus, the sales outlook would lead to a second year-over-year drop in a row. It would also contrast the $30.52 billion expected by analysts. Additionally, based on current exchange rates, the online platform expected a 6.00% revenue growth headwind in the third quarter.
Subsequently, one added challenge for Meta is the continued growth of TikTok. The company said that its Instagram Reels offering tightly competes with the Chinese short video app. The new addition reached $1.00 billion in annualized revenue. However, despite Facebook’s investment in Reels, the product did not generate revenue as efficiently as Instagram Stories.