NEW YORK (REUTERS) – Shares of several major US companies fell in extended trade on Wednesday (July 27) following poor quarterly results and forecasts that underscored fears about a potential recession.
Facebook parent Meta Platforms issued a gloomy forecast after recording its first-ever quarterly revenue decline, with a looming global recession and competitive pressures weighing on its digital sales.
Total revenue, which is made up almost entirely of ad sales, fell 1 percent to US$28.8 billion in the second quarter ended June 30, from US$29.1 billion a year earlier. The figure slightly missed Wall Street projections of US$28.9 billion, according to Refinitiv.
The company said it expects third-quarter revenue between US$26 billion and US$28.5 billion. Analysts had expected US$30.52 billion, according to IBES data from Refinitiv.
The company reported mixed results for user growth.
Monthly active users on flagship social network Facebook came in slightly below analyst expectations at 2.93 billion in the second quarter, an increase of 1 percent year-over-year, while daily active users easily beat estimates at 1.97 billion.
Like many global companies, Meta faces some revenue pressure from the strong US dollar, as sales in foreign currencies are lower in dollar terms. Meta said it expects 6 percent revenue growth in the third quarter, based on current exchange rates.
Meta shares fell nearly 3.4 percent in extended trade.
Qualcomm fell more than 2 percent after offering a fiscal fourth-quarter revenue forecast that missed analysts’ expectations as the mobile chipmaker grapples with tough economic conditions and a slowdown in smartphone demand.
ServiceNow fell 6 percent after the business software seller cut its forecast for subscription revenues, blaming a stronger US dollar. Cloud software heavyweight Salesforce lost more than 2 percent after the ServiceNow report.
The streak of last-day quarterly reports on Wednesday came after the Nasdaq rose 4 percent to post its biggest daily percentage gain since April 2020.
Most of the Nasdaq’s gains came after the US Federal Reserve raised interest rates by 75 basis points, as expected. Some investors view Fed chair Jerome Powell’s comments as a sign the Fed’s fight to tame decades of high inflation may be done by year’s end.
Data to be released on Thursday will show how much the US economy expanded – or contracted – in the June quarter.
Also after the bell, Best Buy fell 2 percent after the electronics retailer warned of a deeper-than-expected decline in annual sales, showing that consumers are feeling the pressure of inflation and higher interest rates, and curbs spending on discretionary items like computers and TVs.
Teladoc Health, the fifth-largest holding in star investor Cathie Wood’s Ark Innovation ETF, fell 20 percent after the virtual healthcare company reported a quarterly loss of US$3.1 billion, almost all of which came from writedowns of its goodwill value.