Why Facebook Stock Dropped Lower Today Despite Earnings Beat

Facebook Inc FB shares slipped nearly 3.5% in the after-hours trading on Wednesday.

What Happened: On Wednesday, the social media giant announced second-quarter earnings per share of $3.61, which beat the $3.02 estimate.

The company raked in $28.5 billion of advertising revenue in Q2 and saw its average price per ad rise 47% year-over-year with 6% more ads delivered in the period.

Chief Financial Officer Dave Wehner warned that the company expected  “increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS updates, which we expect to have a greater impact in the third quarter compared to the second quarter. This is factored into our outlook.”

See Also: How To Buy Facebook (FB) Shares

Facebook gave out guidance for the second half of 2021. Wehner said he anticipates “year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth.”

Facebook shares fell 3.45% to $360.40 in the after-hours session on Wednesday after closing 1.49% higher at $373.28.

Why It Matters: Facebook was rattled earlier this year after Apple Inc AAPL unleashed changes in its iOS14 operating system related to how advertisers track users.

See Also: Why Facebook Is Warning Against The Apple Impact On Revenue In Coming Quarters

The social media behemoth warned last year that it expected its Audience Network revenue to drop by 50% due to Apple’s changes.

In the company’s earnings call Wednesday, CEO Mark Zuckerberg emphasized Facebook’s metamorphosis from a social media company to what he called a “metaverse company.”

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