Facebook President and CEO Mark Zuckerberg testifies at a hearing of the House Financial Services Commission in Washington, Oct.23, 2019.
Erin Scott | Reuters
Prior to the first quarter of this year, Facebook’s revenue growth had never dropped to single digits. In the second quarter, it may not grow at all.
Even if the Facebook parent shares A half jumped about 20% in extended trading on Wednesday profit better than expectedthe company’s activity has stabilized and it does not appear that it will resume at least until the second half of the year.
In its earnings report for the first quarter, Meta provided a guide to revenue for the current period from $ 28 billion to $ 30 billion, following analysts’ average estimate of $ 30.6 billion, according to Refinitiv. In the middle of that range, revenue would decline from the second quarter of 2021, when sales were $ 29.1 billion.
The worst forecast follows growth of just 7% in the first quarter, the slowest pace of expansion in Facebook’s 10-year history as a public company. A year ago at this time, Facebook was growing about 50% from a major post-pandemic boom with the reopening of the economy.
On Wednesday’s earnings call, Meta CEO Mark Zuckerberg attributed the slowdown to both internal and macro factors.
Specific to Facebook, Zuckerberg said there is a focus on short-term video, which is a “drag on revenue” because they don’t monetize as well as the company’s traditional advertising services. More generally, the company deals with privacy changes in Apples iOS and “the softness in e-commerce after the acceleration we saw during the pandemic”.
“We were blocked in Russian and decided to stop accepting ads from Russian advertisers globally,” said Zuckerberg. “And we have also seen effects on businesses globally since the start of the war.”
Investors appear to have discounted the disappointment. By Wednesday’s close, the stock had lost nearly half of its value this year, driven by a major failure to forecast Earnings report for February. In addition to the number of profits in this report, Facebook provided some good news, as both the daily active user figure and the average revenue per user exceeded estimates.
As for the return to growth, analysts predict that the second of the year will see expansion in the teens.