Things have gone from bad to worse for the Meta Platforms share price. In July, the company issued a disappointing quarterly update, and the sentiment has remained sour since. The second quarter numbers were subpar, but the outlook for the third quarter was downbeat, and that did the damage. In the three-month period, EPS was $2.46, undershooting the $2.59 forecast. Revenue was $28.82 billion, which fell by 1% on the year, and it fractionally missed forecasts. Monthly active users was 2.93 million, which was essentially in line with estimates, average revenue per user $9.82, also matching forecasts.
The Facebook owner suffered last year following Apple’s iOS privacy update, as it curtailed the company’s ability to track users. Collecting data is what gives Meta such an edge when it comes to targeted advertising, and therefore it is a less attractive from an advertising point of view. In July, the company cautioned about continued “weak advertising demand”. Adding to that, the group indicated it might look to trim its headcount as the CEO Mark Zuckerberg commented that “I expect us to get more done with fewer resources”. In recent years, the tech sector has gone from strength to strength, and that saw a hiring spree, so it says a lot when a major player in the industry is hinting at reducing staff numbers, or at least, slowing the pace of hiring.
Meta is not the only social media group to feel the strain as firms like Snap and Twitter also encountered similar problems with regards to advertising. The economic environment is looking a little more fragile. Economic activity is cooling, inflation is higher, and interest rates are rising, and that feeds into a less optimistic outlook. Some companies are looking to cut back on advertising and that is hanging over the Meta Platforms share price.
On a year-to-date basis, the Meta Platforms share price dropped by over 50%, and the stock is near the low that was set in March 2020 – at the peak of the selling pressure amid the pandemic. While the stock holds below the $150.00 mark, it is possible the broader bearish trend will continue. A fall from here could see it target $137.00, and a break below that level could see it target $130.00. If the stock rallies above $150.00, it could encounter resistance at $155.00.