Meta Q2 - Revenue Flat

Last night, Meta Platforms (formerly known as Facebook) reported disappointing Q2 numbers, on already low expectations. It was the first time in the company's history that they didn't deliver year-on-year revenue growth, with a decline of 1%. Flat revenue but growing costs resulted in profits falling by 32%. The good news is that they managed to very slightly grow their user base in the face of stiff competition.

The hard thing for Meta is that they are being squeezed by increased competition on one side, and by shrinking advertising budgets on the other, so guidance for the rest of the year is pretty weak. The company is cutting back on hiring and lowering their expansion costs. Thankfully, Meta is still a massively profitable and cash-generative company, so these headwinds are certainly not a death blow. Over the last six months, $14.7 billion was spent on share buy-backs.

Meta is a company in transition, the social media division is slowing and they are spending billions building their augmented reality offering. We still think there's huge growth potential for online advertising spending outside North America.

It is still too early to make a call on Meta, but it is a company that we are watching closely. It is run by very clever people, who have navigated tough times in the past. At the same time, we are well aware of the current challenges. Meta CEO, Mark Zuckerberg, said last night: "I think we're going to come through this period as a stronger and more disciplined organization."