Meta forecast disappointed
Facebook shares smear in after-hours trading
2/2/2022, 11:11 p.m
Facebook’s parent company Meta recorded a significant increase in sales at the end of the year, but investors are anything but happy with the quarterly report. They’re dropping the stock like a hot potato because of declining user numbers and a less than rosy outlook.
The Facebook group Meta has severely disappointed investors with its figures for the past quarter. The stock fell more than 20 percent at times in an early reaction in after-hours trading on Wednesday. One of the unusual developments in the final quarter of 2021 was that the number of daily active users on Facebook fell slightly within three months: from 1.93 to 1.929 billion. In the same quarter of the previous year, it had grown by 25 million. Analysts had expected further growth to 1.95 billion users.
Meanwhile, consolidated sales grew year-on-year by a fifth to just under $33.7 billion. However, the outlook is well below expectations. The bottom line is that profits fell by eight percent to almost 10.3 billion dollars. Above all, Apple’s measures for more privacy on the iPhone made themselves felt on Facebook. App providers like Facebook have had to ask users since last year if they can track their behavior across different services and websites for advertising purposes. Very many iPhone customers rejected this. This makes it difficult for Facebook to tailor ads to individual users, its central business model. In addition, Meta is increasingly facing headwinds in the fight for users’ time. The proliferation of video reels is also a problem because they have lower monetization rates.
Meta also released more detailed information about its virtual reality business for the first time. Over time, this should result in the digital world of Metaverse, in which Facebook founder Mark Zuckerberg sees the future of the group. In the most recent quarter, Reality Labs revenue increased to $837 million from $717 million year over year. At the same time, the operating loss rose from around 2.1 to 3.3 billion dollars.