4 Popular Stocks That Recently Released Revenue Forecasts Below Analysts’ Expectations

Since the beginning of the year, the major stock market indexes have been highly volatile. The volatility has been spurred by rising tensions between the U.S. and Russia over Ukraine and the Fed’s plans to raise interest rates several times this year. Also, recently released Labor Department data shows a 7.5% year-on-year increase in the Consumer Price Index. This marks the index’s highest increase since February 1982. And the potential for the Fed to be more aggressive in combating the multi-decade high inflation could drive further stock market volatility in the near term.

However, the number of companies surpassing EPS estimates for the fourth quarter is above the five-year average. According to FactSet, more than 72% companies in the S&P 500 had reported their fourth-quarter results as of February 11, of which 77% companies have reported EPS above estimates. This compares to the 76% five-year average. In addition, more than 77% of S&P 500 companies have reported revenues above estimates, which is above the 68% five-year average.

While the overall impressive corporate earnings have been solid of support to the market, popular stocks Meta Platforms, Inc. (FB), PayPal Holdings, Inc. (PYPL), Affirm Holdings, Inc. (AFRM), and Upwork Inc. (UPWK) reported revenue guidance forecasts for future periods below Wall Street estimates.

Meta Platforms, Inc. (FB)

FB in Menlo Park, Calif., focuses on building products that enable people to connect and share through mobile devices, personal computers, virtual reality headsets, and in-home devices. Its segments include Family of Apps and Facebook Reality Labs.

FB expects its revenue for the first quarter, ended March 31, 2022, to be between $27 billion and $29 billion, which is below the Street’s $30.15 billion estimate.

FB’s revenue increased 20% year-over-year to $33.67 billion for the fourth quarter, ended Dec. 31, 2021. Its income from operations decreased 1.4% year-over-year to $12.58 billion. And the company’s operating margin came in at 37%, compared to 46% in the year-ago period. Also, its net income decreased 8.3% year-over-year to $10.28 billion.

Analysts expect FB’s EPS for the quarter ending March 31, 2022, to decrease 21.8% year-over-year to $2.58. The stock has declined 32.6% in price since it reported its earnings on Feb.2, 2022.

PayPal Holdings, Inc. (PYPL)

PYPL is a San Jose, Calif.-based technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants. Its combined payment solutions comprise its Payments Platform, including PayPal, PayPal Credit, Braintree, Venmo, Xoom, iZettle, and Hyperwallet products and services.

For its fiscal fourth quarter, ended Dec. 31, 2021, PYPL’s net revenues increased 13% year-over-year to $6.91 billion. Its non-GAAP operating margin came in at 21.8%, compared to 24.7% in the year-ago period. The company’s operating expenses increased 13.8% year-over-year to $5.86 billion. Also, its non-GAAP net income increased 3% year-over-year to $1.31 billion.

PYPL expects its revenue for fiscal 2022 to be between $29.18 billion - $29.68 billion, which is below the $29.88 billion consensus estimate.

And for the quarter ending March 31, 2022, PYPL’s EPS is expected to decline 27.9% year-over-year to $0.88. The stock has declined 33.5% in price since it reported its earnings on Feb. 1, 2022.

Affirm Holdings, Inc. (AFRM)

AFRM provides digital and mobile commerce platforms by enabling a technology-driven payments network through partnerships with banks. A consumer can use the company’s platform by selecting their repayment option while the loans are funded and issued by its bank partner. Its platform has three elements: a point-of-sale payment solution, merchant commerce solutions, and consumer-focused applications. AFRM is headquartered in San Francisco.

AFRM’s Gross Merchandise Volume (GMV) for its fiscal second quarter, ended Dec. 31, 2021, increased 114.2% year-over-year to $4.50 billion. And its total revenue increased 76.9% year-over-year to $361 million. Also, its net loss widened 500.2% year-over-year to $159.73 million.

AFRM’s revenue guidance for the third quarter ended March 31, 2022, is $325 million to $335 million versus Street $335.50 million estimate.

Analysts expect AFRM’s EPS to remain negative this year and next year. Also, it failed to surpass the Street’s EPS estimates in each of the trailing four quarters. The stock has declined 38.4% in price since it reported its earnings on Feb. 10, 2022.

Upwork Inc. (UPWK)

Mountain View, Calif.-based UPWK operates a work marketplace that connects businesses with independent talent. The company’s independent talent, referred to as freelancers, together with clients, as users, include independent professionals and agencies of varying sizes. Its marketplace offerings include Upwork Basic, Upwork Plus, Upwork Enterprise, and Upwork Payroll.

For its fiscal fourth quarter, ended Dec. 31, 2021, UPWK’s total revenue increased 28.9% year-over-year to $136.85 million. The company’s non-GAAP net loss came in at $6.09 million, versus $7.75 million in non-GAAP net income in the year-ago period. Also, its adjusted EBITDA loss came in at $3.26 million, compared to an adjusted EBITDA of $9.55 million in the year-ago period.

UPWK expects its revenue for the first quarter, ended March 31, 2022, to be between $139 million - $141 million, compared to Wall Street analysts’ $139 million estimate. Also, its revenue guidance for fiscal 2022 is in the range of $620 million - $630 million, compared to the $621 million consensus estimate.

For the quarter ending March 31, 2022, UPWK’s EPS is expected to decrease 100% year-over-year. The stock has declined 9.4% in price since it reported its earnings on Feb. 10, 2022.

FB shares rose $4.51 (+2.07%) in premarket trading Tuesday. Year-to-date, FB has declined -35.28%, versus a -7.57% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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