By Nivedita Balu and Elizabeth Culliford
(Reuters) -Meta Platforms Inc shares climbed on Wednesday as Facebook‘s quarterly daily active users were above Wall Street estimates, even as Meta recorded its slowest revenue growth in a decade.
Shares of the social media giant rose 15% in extended trading.
Profit soundly beat Wall Street targets at $2.72 per share, compared with an analyst consensus of $2.56, according to IBES data from Refinitiv.
Facebook daily active users (DAU), a key metric for advertisers that indicates activity on the platform, were 1.96 billion, slightly higher that the estimate of 1.95 billion, according to IBES data from Refinitiv. Monthly active users came in at 2.94 billion, missing Wall Street estimates by 30 million.
Meta has lost about half of its value since the start of the year, after a dismal February earnings when it reported a decline in Facebook’s daily active users for the first time and forecast a gloomy quarter, blaming factors including Apple’s privacy changes and increased competition from platforms like ByteDance’s TikTok.
“Its good news that Meta somehow managed to eke out growth in DAU. It needed to show some sort of turnaround from last quarter’s performance,” Insider Intelligence analyst Debra Williamson said.
“However, growth in monthly active users is slowing quickly. A few quarters ago it could count on developing markets to keep the growth engine going but it’s likely that even these high-growth opportunities are starting to dry up,” she said.
Total revenue, the bulk of which comes from ad sales, rose 7% to $27.91 billion in the first quarter, but missed analysts‘ estimates of $28.20 billion, according to IBES data from Refinitiv.
Net income fell 21% to $7.47 billion in the first quarter, but beat analysts’ estimates of $7.15 billion, according to IBES data from Refinitiv.
Meta forecast second-quarter revenue between $28 billion and $30 billion. Analysts on average were expecting current-quarter revenue of $30.63 billion. The company said its outlook reflected factors including the war in Ukraine. It also said it was monitoring the potential impact of regulatory moves in Europe.
Recent earnings reports from Google parent Alphabet Inc and Snap Inc have signaled the impact of the global economic turmoil on digital ads spending, amid rising inflation and geopolitical uncertainty.
Meta lowered its expected 2022 total expenses to between $87 billion and $92 billion, down from its prior outlook of $90 billion to $95 billion.
(Reporting by Nivedita Balu in Bengaluru and Elizabeth Culliford; Editing by Sriraj Kalluvila and Lisa Shumaker)