NEW YORK (REUTERS) - Shares of several major US companies tumbled 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 drop in revenue, with a global recession looming and competitive pressures weighing on its digital ad sales.
Total revenue, which consists almost entirely of ad sales, fell 1 per cent to US$28.8 billion (S$39.8 billion) in the second quarter ended June 30, from US$29.1 billion last year. The figure slightly missed Wall Street's projections of US$28.9 billion, according to Refinitiv.
The company said it expects a third-quarter revenue of between US$26 billion and US$28.5 billion. Analysts were expecting 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 under analyst expectations at 2.93 billion in the second quarter, an increase of 1 per cent year over year, while daily active users handily beat estimates at 1.97 billion.
Like many global companies, Meta is facing some revenue pressure from the strong US dollar, as sales in foreign currencies amount to less in dollar terms. Meta said it expected a 6 per cent revenue growth headwind in the third quarter, based on current exchange rates.
Meta shares were down about 3.4 per cent in extended trading.
Qualcomm dropped more than 2 per cent after offering a fiscal fourth-quarter revenue forecast that missed analysts' expectations as the mobile chipmaker braces for difficult economic conditions and a slowdown in smartphone demand.
ServiceNow slumped 6 per cent after the business software seller cut its forecast for subscription revenues, blaming a stronger US dollar. Cloud software heavyweight Salesforce lost more than 2 per cent after ServiceNow's report.
Wednesday's slew of late-day quarterly reports came after the Nasdaq rose 4 per cent to post its biggest daily percentage gain since April 2020.
Most of the Nasdaq gains came after the United States Federal Reserve raised interest rates by 75 basis points, as expected. Some investors viewed comments by Fed chair Jerome Powell as signalling that the Fed's fight to tame decades-high inflation could be done by year end.
Data due out on Thursday will show how much the US economy expanded - or shrank - in the June quarter.
Also after the bell, Best Buy fell 2 per cent after the electronics retailer warned of a deeper-than-expected drop in annual sales, showing that consumers are feeling the pressure of inflation and higher interest rates, and curbing spending on discretionary items such as computers and TVs.
Teladoc Health, the fifth largest holding in star investor Cathie Wood's Ark Innovation ETF, collapsed by 20 per cent after the virtual healthcare company reported a quarterly loss of US$3.1 billion, with almost all of that from writing down the value of its goodwill.