Meta Leading Facebook Disappointed by Poor Earnings... Stock Drops 20% (Comprehensive)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Meta, the parent company of Facebook, saw its stock price plunge about 20% on the 2nd (local time) after releasing last year's earnings and this year's outlook that fell short of market expectations.

According to CNBC and other outlets, Meta announced after the New York Stock Exchange closed that its fourth-quarter revenue last year was $33.67 billion (approximately 40.7 trillion KRW), and earnings per share were $3.67. This fell short of market estimates of $33.4 billion and $3.84 per share. Daily active users and monthly active users were also 20 million and 40 million fewer than market expectations, respectively.

This earnings report was the first since Facebook's parent company changed its name to Meta in October last year. Meta stated that the growth in earnings is expected to slow somewhat as users increasingly use Reels (a short video sharing service), which is less profitable, and recent inflation rises have affected advertisers' spending.

Bloomberg reported, "Facebook is feeling the intensifying competition for users' time and the shift of user attention toward video." It explained that Facebook has been hit as video-centric social networking services (SNS) like YouTube and TikTok have shown growth.

Meta also issued a lower-than-expected forecast for the first quarter of this year. Meta estimated first-quarter revenue to be between $27 billion and $29 billion, which falls short of the Wall Street analyst consensus of $30.15 billion compiled by financial information firm Refinitiv. Additionally, investors are concerned about Meta increasing spending on new businesses such as the metaverse.

On this day, Meta disclosed the financial results of its Reality Labs business segment separately for the first time. Reality Labs results include sales of VR and AR hardware and software. According to Meta, the annual net loss of the Reality Labs segment last year was $10.2 billion, an increase from the previous year's loss of $6.6 billion.

Meta's stock price plummeted vertically after the earnings announcement, dropping more than 20% in after-hours trading. CNBC reported, "Facebook's stock plunged as it released disappointing fourth-quarter results along with a weaker-than-expected revenue forecast."

This content was produced with the assistance of AI translation services.