Tech Tumult: A Rocky Q3 for Meta and Google Amid Industry Turmoil
Stock Prices Plummeting as Investors Hedge Their Bets on Economic Downturn
It's been a roller coaster ride for tech giants Meta and Google, as disappointing Q3 results prompted a sell-off and raised concerns about the industry's resilience.
Meta Plummets as Investors Flee
In the face of global economic uncertainties, investors started shedding their shares in tech heavyweights, with Meta being no exception. After unveiling a dismal Q3 report, the social media titan saw a sudden sell-off that culminated in its share price dipping below $100, a level not seen since 2016, representing a 25% drop from its high.
The tech behemoth is caught between a rock and a hard place. On one hand, it grapples with fierce competition from TikTok, while on the other, it succumbs to the ripple effects of the global slowdown in advertising spend due to recession fears. Saw 4% less in sales during the quarter and 52% lower profit year-over-year. Worse, Meta warned investors not to expect a recovery anytime soon.
In addition, Meta faced the consequences of Apple's App Tracking Transparency policy, which was implemented last year. The policy, forcing developers to let users opt-in or opt-out of in-app tracking, has impacted Meta's primary advertising model, costing it up to $10 billion in ad revenue this year.
Unintended consequences of the policy included the proliferation of gambling apps beneath problem gambling apps and apps for children's education.
Google Takes a Hit, Too
Meta's disappointing performance marked the latest in a series of lackluster earnings reports this week across the tech sector. Alphabet, Google's parent company, registered a 6% revenue boost on Tuesday but missed market expectations, causing a 5% slide in its share price after-hours. Like Meta, Google is also feeling the heat from TikTok, while battling competition in a downturn-hit advertising market.
Gambling Tech Stocks: A Year of Losses
Gambling tech B2B supplier Evolution AB published its Q3 report this week, showcasing a 37.1% increase in revenue and a 37.5% jump in operating profit year-over-year. Despite the impressive figures, the stock's share price has dropped nearly 40% in 2022 alone but has since rebounded half of its losses.
Entain, another large-cap gambling stock, followed a similar downward trend in 2022, having lost over 25% of its value, while 888 Holdings is down nearly 70% since January.
While 2022 saw significant challenges for these companies, current insights are not readily available to draw meaningful comparisons. Nevertheless, it's clear that the tech sector is grappling with an industry-wide slowdown, placing investor confidence to the test.
[1] Meta projecting AI-driven ad growth and margin recovery[3] Chinese advertiser volatility posing new risks[5] Unspecified positive market observations
- Meta aims to drive growth in its advertisement sector through AI implementation, with a focus on recovering margins.
- The technology sector, including Meta, faces new risks due to the volatility in advertising spending from Chinese advertisers.
- In 2022, transparency, particularly in technology and stock markets, has been subject to increased scrutiny, with investors assessing the industry's resilience in the face of challenges.
