After a tough post-pandemic period, shares in Meta Platforms have risen by 150 per cent since the start of the year as investors welcome its belt-tightening measures and a rebound in its advertising income. It cut 11,000 jobs last November, 15 per cent of its workforce.
In its third-quarter results on Wednesday, the company is expected to report revenue of $33.5 billion, up 21 per cent on the year, with just over two billion daily active users, a rise of 4 per cent, according to Bloomberg. The owner of Facebook, Instagram and WhatsApp faces a challenge from TikTok, which is snapping at its heels. As a result, the market will be watching user numbers and what the company has to say about the strength of recovery in its advertising.
Its investment in the so-called metaverse, through its Reality Lab division, developer of its Quest headset, continues to be a drag on the business. This is unlikely to change, with Meta having warned previously that losses will widen “meaningfully” in 2023. However, it has scaled back its investment in this area to focus more on artificial intelligence. It has leapt into the generative AI race with its Llama 2 chatbot, based on an open-source, “large language” model, a different approach to that adopted by other leading technology companies.
Tomorrow
Alphabet is expected to update investors on its cost-control measures and its progress on AI when it reports third-quarter earnings. The owner of Google is set to announce revenue of $63.8 billion for the three-month period, according to analysts at Bank of America, who expect the company to keep pressing ahead with measures to reduce costs and therefore improve margins.
They think revenue growth in the search division and in YouTube will rise by 10 per cent and 12 per cent, respectively. Alphabet’s increasing focus on cloud products will be a key growth area as the platform makes progress on AI-capable chips and services, with revenue in the overall division set to jump by 26 per cent.
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Bank of America believes new AI investments will drive up full-year capital expenditure by 6 per cent to $38.9 million.
Interims Baillie Gifford China Growth, FD Technologies
Finals Gattaca, Scancell, Softcat
Wednesday
Asos expects to report annual earnings before interest and taxes at the bottom of its £40 million to £60 million forecast range. The troubled owner of Topshop and Miss Selfridge cut its full-year profit guidance last month after a washout summer compounded weaker demand for online fast-fashion.
The retailer, which enjoyed a sales surge during the pandemic, has since suffered slowing demand as shoppers return to the high street and as many consumers struggle with higher bills amid a continuing crisis in the cost of living. Mike Ashley’s Frasers Group, which holds a 23 per cent stake in Asos, will be keen to see if its “driving change” plan can give shareholders something to smile about.
José Antonio Ramos Calamonte, who has led the business since June last year, has been working to reduce stock, cut back on excessive discounting and sell more full-priced items as part of his vision to fix the business.
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Interims Bytes Technology
Finals Asos, ScS
Thursday
The performance of Amazon Web Services, the cloud business that is the financial engine for the wider Amazon group, will be watched closely in its quarterly earnings. Online sales and advertising are the other big revenue streams.
With its July sale known as “prime day” being the company’s biggest ever, shareholders will want to see how these areas have held up in the face of economic headwinds. Bloomberg forecasts that the technology group’s revenue will be $142 billion, up 11 per cent from the same three-month period last year, with online store revenue up 6 per cent to about $57 billion. Revenue at AWS is expected to rise by 13 per cent to $23 billion.
Interims Bloomsbury, C&C Group, Harbourvest Global Private Equity
Friday
The City will be hoping that nothing has derailed International Consolidated Airlines Group, the British Airways owner, in the third quarter after it reported record half-year profits in July. At the time of those results, IAG said it had already booked 80 per cent of third-quarter revenue. Analysts expect revenues for the third quarter to be €7.2 billion and that full-year revenues will rise to €24.9 billion.
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Interims International Consolidated Airlines Group
