Facebook owner Meta heads for a dismal quarter as advertisers are no longer friends

The Meta and Facebook logos are seen in this illustration taken February 15, 2022. REUTERS/Dado Ruvic/Illustration GLOBAL BUSINESS WEEK AHEAD

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April 27 (Reuters) – Facebook owner Meta Platforms Inc (FB.O) is expected to report its slowest quarterly ad revenue growth in a decade on Wednesday as companies cut advertising spend amid the surge world inflation and war. in Ukraine.

Global advertising and marketing budgets will be further stretched if the Ukraine crisis drags on in the coming months, with some analysts predicting that Meta will also issue lukewarm guidance for the current quarter.

Meta’s ad revenue is expected to have risen 8.7% in the first quarter, according to data from Refinitiv, the slowest since 2012 when the company went public.

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Wall Street analysts have also said Facebook could lose its grip on the global advertising market even as digital advertising overtakes traditional methods.

“Meta’s forecast for a slowdown could also be read as a reduction in Facebook brand power,” said Hargreaves Lansdown analyst Sophie Lund-Yates.

Meta has lost nearly half of its market value since Feb. 2, when it first reported a decline in Facebook’s daily active user count and forecast a dismal quarter. Read more

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THE CONTEXT

Alphabet, Google’s parent company, gave a clue on Tuesday, citing the war in Ukraine for slowing ad sales on YouTube. Small rival Snap Inc (SNAP.N) warned that inflation, labor shortages and other economic challenges could put pressure on ad revenue.

The timing couldn’t have been worse for tech companies that depend on ad revenue, as they also grapple with policy changes in Apple’s App Store and growing competition for ad dollars from companies like Tik Tok.

“The cost of acquiring customers on digital channels like Facebook has gone up while the ability to target customers has gone down,” said Mitchell Olsen, assistant professor of marketing at the University of Notre Dame.

As a result, many brand managers are reducing their exposure to Facebook and reallocating their advertising dollars across various platforms, Olsen added.

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THE FUNDAMENTALS

** Co reports 7.8% increase in first-quarter revenue to $28.20 billion, slowest growth since 2012

** Earnings per share is estimated at $2.56

** Ad revenue is expected to increase 8.7% to $27.66 billion

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WALL STREET FEELING

** 45 out of 63 analysts rate the stock “buy” or higher, while 16 have a “hold” rating and two rate it as “sell” or lower

** The median price target is $325, down $25 in the last three months

** FB is currently trading at $173.94

(Story corrects Wednesday from Thursday in first paragraph, adds Meta in title.)

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Reporting by Yuvraj Malik and Eva Mathews in Bengaluru; Editing by Sweta Singh and Saumyadeb Chakrabarty

Our standards: The Thomson Reuters Trust Principles.

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