Mark Zuckerberg, chief executive officer of Meta Platforms Inc., left, arrives in federal court in San Jose, California, U.S., Tuesday, Dec. 20, 2022.

David Paul Morris | Bloomberg | Getty Images

Meta reports fourth-quarter earnings on Wednesday as the company tries to reverse a slump that sent shares tumbling 64% last year.

Here’s what analysts expect:

  • income: $2.22 per share, according to Refinitiv
  • income: $31.53 billion is expected, according to Refinitiv
  • Daily Active Users (DAU): 1.99 billion is expected, according to StreetAccount
  • Monthly Active Users (MAU): 2.98 billion is expected, according to StreetAccount
  • Average Revenue Per User (ARPU): $10.63 is expected, according to StreetAccount

Meta’s sales are expected to decline for a third straight quarter, underscoring the challenges facing the social media company as economic uncertainty forces businesses to cut digital ad spending and suspend campaigns.

Analysts expect parent company Facebook to report a more than 6% decline in revenue for the fourth quarter, and they predict another quarterly decline before growth starts to rebound later this year.

While the stock market started to recover in January after a rough 2022, economic forecasts still point to a rather bleak 2023, which could mean further challenges for the online advertising market. A recent Cowen survey of 50 ad buyers found that companies plan to increase their ad spending by just 3.3% in 2023, which the investment bank said is “the softest ad growth forecast in five years.”

On Tuesday, Snap reported fourth-quarter earnings that missed estimates, sending shares lower in after-hours trading. The company also said its “internal forecast” calls for a 2% to 10% drop in first-quarter revenue.

Although Snap is much smaller than Meta, it faces some of the same challenges, including slowing online ad spending, increased competition from TikTok, and a weakening of targeted advertising due to Apple iOS 2021 Privacy Update. Alphabet and Amazon will report earnings from major online advertising platforms on Thursday and then Pinterest Next week.

In November, Meta said it would lay off more than 11,000 employees, or 13% of its workforce, as part of the company’s cost-cutting plans.

“We’re also taking a number of additional steps to become a more lean and efficient company by reducing discretionary spending and extending our hiring freeze through the first quarter,” CEO Mark Zuckerberg said in a letter to employees at the time.

The past year has also been marred by Zuckerberg’s costly efforts to sell Wall Street on a plan to pivot the company toward the yet-to-be-developed world of the metaverse. Zuckerberg said the metaverse, which will include virtual reality and augmented reality technologies, could be the next big way people interact.

The big bid disappointed investors who worry the company is focusing too much on futuristic efforts while its core advertising business struggles to revive growth. In the first three quarters of 2022, Meta Reality Labs, the division that houses the ambitions of the meta universe, lost nearly $9.4 billion.

Analysts expect Reality Labs to post a fourth-quarter operating loss of $4.36 billion on revenue of $715.1 million, according to StreetAccount. Meta said last quarter that “Reality Labs’ operating loss in 2023 will increase significantly compared to last year.”

LOOK: Snap shares fall on weak earnings

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