Meta Platforms (META -0.68%) has had a rough year and is grappling with several headwinds simultaneously that have its stock down 52% from highs set last October. Those headwinds include policy changes that reduce the effectiveness of its targeted advertising, consumers changing social media preferences, and a struggling economy that has some companies reducing their advertising budgets for now. The company is also investing heavily in expanding its metaverse offerings and the cost is having a short-term effect on Meta's bottom line.

The stock is down as investors try to determine how these headwinds and others might affect the profitability of the social media giant. Those investors will get an update on the effect when Meta reports fiscal 2022 second-quarter earnings after the markets close on Wednesday, July 27. Here's what to look for in that release. 

Meta faces challenges that are slowing revenue growth

The headwinds mentioned above worked together to slow Meta's revenue growth in its first quarter. Meta reported sales of $27.9 billion in Q1, representing a 7% increase from the year-ago period. That 7% increase represents a significant deceleration, consider that the company has grown revenue at a compounded annual rate of 41.3% over the last decade.

Meta's social media platforms -- including Facebook, Instagram, WhatsApp, and Messenger -- are free to use. The company makes money by showing ads to users browsing the services. As of March 31, it boasted 2.87 billion daily active users across its family of apps. That represented a 6% increase from last year. It's impressive that Meta keeps adding incremental users despite its already massive scale. Roughly 36% of the planet uses one of its apps daily.

The headwinds appear not to impact user growth adversely. Instead, they are primarily decreasing the prices advertisers are willing to pay. In the quarter ended in March, Meta sold 15% more ads year over year. However, the price per ad fell by 8%. Recall that Apple made user privacy policy changes for its operating system making it more difficult to sell targeted ads. Marketers prefer precision advertising because it reduces wasteful spending, and they are willing to pay more for the feature. It's not surprising to see the price per ad fall as Meta's targeting capability is hampered by the changes implemented by Apple.

Furthermore, users are shifting their preference in how they interact with social media sites to favor short-form videos over photos and text. Meta's business has been built to capitalize on folks interacting with images. That said, it has realized the change in consumer behavior and is investing in its short-form video initiative. It will take time to fully roll out, develop ad capabilities around it, and get monetization up to the levels of photos.

The final headwind from the downturn among various economies around the world, especially in the U.S. and Europe, is outside its control. Only time and improving economic conditions will offset the impact. As is almost always the case, when uncertainty rises, marketers hesitate or simply reduce spending.

Revenue and earnings to continue the downward trend

Analysts on Wall Street expect Meta Platforms to report revenue of $29.07 billion and earnings per share (EPS) of $2.61. If the company meets those projections, those figures will represent an increase of 4.2% and a decrease of 27.7%, respectively, from the same period the year prior.

Perhaps more important than the revenue and earnings results for Q2 will be management's commentary on the headwinds discussed above. More specifically, on the progress it's making with its own short-form video format, customer usage trends, and monetization. If it sounds an optimistic tone on that front and supports it with robust metrics, it could be the catalyst that reverses the stock's decline.