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Meta stock tumbles 20 percent after earnings report

Shares of the newly formed Facebook parent Meta Platforms tumbled more than 20 percent in after-hours trading Wednesday after the company released its latest earnings and projections.

Meta dropped from around $323 per share to $252 per share. The company, which also owns Instagram and WhatsApp, predicted that first-quarter revenue in 2022 will be between $27 and $29 billion, below the $30 billion anticipated by Wall Street.

Meta attributed the lower estimate to a combination of factors, including privacy changes to Apple’s iOS and supply chain issues.

Facebook’s user growth slowed last quarter, with daily active users dropping from 1.930 to 1.929 billion. Most of that drop came from Africa and Latin America, a potentially worrying sign given that the social media’s growth has been stagnant in North America and Europe for some time.

Wednesday’s report was also the first following Facebook’s rebrand to Meta and gave an early glimpse of the economic return on the company’s metaverse ambitions.

Facebook Reality Labs, the company’s hardware division that builds the Oculus Quest headset, earned $877 million on the back of strong holiday season. 

That is still a tiny fraction of the company’s overall haul of $33.67 billion in the fourth quarter of 2021, showing that the transition away from a social media and advertising company may take time.

That revenue was enough to earn $10.3 billion, or $3.67 per share, slightly below analyst estimates.

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