Meta Platforms (META -0.49%) stock trailed the market in early trading on Tuesday, with shares falling 3% by 11 a.m. ET, compared with a 1.4% slump in the S&P 500. The decline added to significant losses for shareholders so far in 2022, as the social media giant's stock is down nearly 50% since the start of the year.
Concerns are rising about what the company might have to say about its growth and earnings prospects in an upcoming quarterly update.
Meta is scheduled to issue its first-quarter earnings results after the closing bell on Wednesday. Worries about that announcement are likely the main driver behind the stock's underperformance today. It also doesn't help that the Nasdaq index is seeing significant selling pressure, down nearly 3% in morning trading.
Concerns about the business mainly fall into two big categories. First, Meta Platforms' advertising revenue, its core profit source, is under pressure as platform owners like Apple make it harder to track users' browsing behavior. That pressure is being amplified by slowing user growth on both Facebook and Instagram.
Second, the company's bets on virtual reality, the metaverse, and augmented reality haven't demonstrated solid returns yet. Instead, the reality labs division posted a $10.2 billion operating loss in 2021.
Wall Street will be focused on what CEO Mark Zuckerberg and his team say about these challenges on Wednesday afternoon. Investors will be watching for signs of an advertising rebound, or any further evidence that users are moving to other social media platforms.
If Meta can show positive progress, the stock might jump this week given its jarring crash so far in 2022. But investors can expect more volatility as long as there's this uncertainty about the stability of its advertising business and its bets on future growth.