The ex-Facebook was disappointed with its results and the number of users in the fourth quarter of 2021. Revenue forecasts are well below expectations for the first quarter while investments in the metaverse will weigh on profits. The action plunges 20% in New York.
Meta Platforms has just lost a lot of friends in a matter of seconds… Quarterly data below expectations and disappointing forecasts got the better of shareholders' and investors' confidence. On Wall Street, the reaction was immediate. In pre-market, the action of the former Facebook plunged 20%. It is 180 billion dollars of market capitalization which are flying away and the heaviest sanction ever accused by the group of Mark Zuckerberg or, more broadly by a company listed in New York, underlines Bloomberg. The agency also calculates that this loss in value represents the market capitalization of 460 of the 500 components of the S&P 500.
First pitfall, the accounts for the fourth quarter contain only a few good surprises. Admittedly, the turnover is slightly higher than analysts' expectations, at 33.67 billion dollars, against 33.4 billion anticipated, but the profit per share only comes out at 3.67 dollars, against 3.84 dollars. hoped.
Fewer users...
The number of users, above all, disappointed. The average revenue per user (Arpu) is, of course, a little higher than expected, at 11.57 dollars, against 11.38 dollars targeted by analysts, but they are fewer: 1.93 billion active users dailies in December, against 1.95 billion anticipated, and 2.91 billion in monthly assets (2.95 billion). This is the first time in the company's history that the number of daily active users is down from the previous one.
Forecasts for the first quarter are of no help, quite the contrary. Revenue is expected in the range of $27 billion to $29 billion, far from the $30.15 billion expected by the Refinitiv consensus. This would mean growth, slowed down, from 3% to 11% from one year to the next.
…and more investments
At the origin of the "malaise", increased competition from other platforms, in particular from the video-sharing application TikTok, changes to the privacy policy of Apple's iOS, and economic considerations. The weaker-than-expected growth is believed to be partly due to inflation and supply chain issues, which impact advertisers' budgets. Users are also spending more and more time on the group's Reels videos, which are less profitable for the time being than the network's traditional news feed.
This comes at the worst time for Meta Platforms, which has committed, at the same time as its name change, to heavy investments, and over a long period, to deploy its metaverse and its virtual reality activities gathered within of the Reality Labs division. Investments that will weigh on the group's operating profit for many quarters.
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