Meta Platforms Inc, the parent company of Facebook, saw its stock drop more than 20% late Wednesday after the social networking firm issued a weaker-than-expected projection, blaming Apple’s privacy restrictions and more competition for users from rivals such as TikTok. For the first time in its history, Facebook’s global daily active users fell from 1.930 billion to 1.929 billion in the third quarter.
Apple Inc.’s (AAPL.O) operating system privacy changes have made it more difficult for marketers to target and measure their ads on Facebook and Instagram, according to Meta. Macroeconomic concerns, such as supply-chain disruptions, were also mentioned.
Due to increased competition for users’ time and a shift in engagement toward features such as its short video offering Reels, which generate less revenue, the 18-year-old tech giant, which also faces pressure from platforms like TikTok and Google’s YouTube, said it expected revenue growth to slow in the coming quarter. In the fourth quarter, Facebook had 2.91 billion monthly active users, flat from the previous quarter.
After-hours losses in its share wiped off $200 billion in market value, while peers Twitter Inc (TWTR.N), Snap Inc (SNAP.N), and Pinterest Inc (PINS.N) each lost $15 billion. find out more Alphabet Inc (GOOGL.O) shares were down roughly 2% after the company reported record quarterly sales that beat estimates on Tuesday. It, which owns the world’s second-largest digital ad platform behind Google, has previously warned that the fourth quarter would bring “substantial volatility” to its advertising business. find out more
On a conference call with analysts, Meta’s chief financial officer, Dave Wehner, said the impact of Apple’s privacy measures may be “on the range of $10 billion” by 2022. Apple has made modifications to its operating software that allow users to opt-out of apps tracking their online activity for commercial purposes, making it more difficult for advertisers that rely on data to build new goods and understand their market.
First-quarter sales is expected to be in the range of $27 billion to $29 billion, according to Meta. According to Refinitiv’s IBES statistics, analysts expected $30.15 billion.
On November 2, 2021, a 3D printed version of Facebook’s new branding logo Meta is placed on a laptop keyboard in this picture. REUTERS/Dado Ruvic/File Photo/Illustration “It’s evident that there are several large barriers ahead,” noted Insider Intelligence analyst Debra Aho Williamson, “as Meta faces difficult new competition for ad revenue, such as TikTok, and as it struggles with continued ad targeting and measurement challenges from Apple’s iOS updates.”
According to IBES statistics from Refinitiv, the company’s overall revenue increased to $33.67 billion in the fourth quarter from $28.07 billion the year before, topping analysts expectations of $33.40 billion. “I’m encouraged by the progress we made this year in a number of important growth areas like Reels, commerce, and virtual reality,” CEO Mark Zuckerberg said in the earnings release. “We’ll continue investing in these and other key priorities in 2022 as we work to build the metaverse.”
During Meta’s earnings call, he mentioned that competition for customers was an issue affecting the business, specifically highlighting TikTok and emphasising Meta’s commitment to delivering services for young adults. For the entire year 2021, Meta’s Reality Labs, the company’s augmented and virtual reality division, reported a net loss of $10.2 billion, up from a $6.6 billion loss the previous year. This was the first time the corporation has separated this portion from the rest of the findings.
Zuckerberg had earlier stated that the company’s investment in this area would cut its operating profit by $10 billion in 2021 and that it would not be profitable “any time soon.” In 2021, Reality Labs made $2.3 billion in revenue. The sales figures for the virtual reality Quest headgear have not been made public by the firm.
The business announced on Wednesday that its stock symbol would be changed to “META” this year, the latest step in its rebranding to focus on the metaverse, a futuristic concept of virtual spaces where users can work, connect, and play. Roundhill Investments announced in January that it will no longer use the ticker for its Roundhill Ball Metaverse ETF, and Meta declined to comment on the pricing of the sale.
The IT behemoth, which changed its name to reflect its metaverse ambitions in October, is wagering that the metaverse will be the mobile internet’s replacement. “Investors looking at Meta are starting to realise that buying their stock isn’t just an investment in their ad platform anymore,” said Flynn Zaiger, CEO of social media consultancy Online Optimism. “Investing in Meta now appears to be more of a commitment that you believe the metaverse will eventually replace most of what internet users are used to.”
Meta’s rebranding comes at a time when politicians and regulators are scrutinising the company for claims of anticompetitive behaviour and the consequences of how it handles toxic or deceptive content on its Facebook and Instagram platforms.
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