Meta Earnings Fall Short Of Expectations And Stock Dives 23%

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Earnings per share of Meta Platforms Inc (NASDAQ:FB) fell short of analysts’ estimates as the internet giant reported $3.67 vs. $3.84. The company’s guidance for the first quarter of 2022 sets a revenue of between $27 billion and $29 billion, far below the $30.15 billion expectations.

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Q4 2021 hedge fund letters, conferences and more

Disappointing Earnings

As reported by CNBC, not only did Meta fall short of earnings per share for Q4 and warped down its revenue guidance, but also the shares of the company dived 23% on Thursday.

Further, while pursuing the metaverse, Meta reported losses of $10 billion in 2021 in its virtual reality division, Reality Labs.

“The company said Apple’s iPhone privacy changes, which impact its ad-targeting and measuring, would result in a $10 billion revenue hit this year.”

Analysts of JPMorgan Chase & Co (NYSE:JPM) downgraded Meta’s stock from overweight to neutral and adjusted the price target to $284 from $385.

They further said: “[Meta] is seeing a significant slowdown in advertising growth while embarking on an expensive, uncertain, multi-year transition to the Metaverse.”

Fewer Users

Not only did the earnings report unimpressed analysts but they also took notice of the number of users Facebook lost in the last quarter of 2021 —the first drop in 18 years. The company lost almost half a million daily users between Q3 and Q4 to 1.93 billion.

According to The Washington Post, “The loss was greatest in Africa and Latin America, suggesting that the company’s product is saturated globally — and that its long quest to add as many users as possible has peaked.”

In October, Facebook rebranded itself as Meta to be seen as more than "a social media company," focusing on the "Metaverse," an online virtual world where businesses and users can connect and interact.

In its first earnings report after the name change, Meta also disclosed that its ad growth was lower than anticipated, and the share plunge could wipe about $175 billion off the company's value if the slide continues.

Meta is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.