Facebook Shares Collapse as Company Reports Weak Earnings and a Forecast Miss

Facebook, who has rebranded its name to Meta, reported fourth quarter earnings this week that failed to impress Wall Street.

The earnings came in below expectations and the company also warned that numerous challenges are ahead in the first quarter.

Inflation, supply chain disruptions at advertisers and users shifting to products that “monetize at lower rates” are among the key issues that Facebook is facing.

Facebook projected that revenue in the first quarter will be between $27 billion and $29 billion, while analysts were looking for that number to top $30 billion.

Meta shares tumbled more than 20% in extended trading on Wednesday.

For the fourth quarter, earnings per share came in at $3.67 vs $3.84 expected, according to a Refinitiv survey of analysts. Revenue at $33.67 billion vs $33.4 billion expected, according to
Refinitiv.

Facebook also missed estimates with user numbers. Daily Active Users (DAUs) were 1.93 billion vs 1.95 billion expected by analysts, according to StreetAccount. Monthly Active Users (MAUs) were 2.91 billion vs 2.95 billion expected by analysts, according to StreetAccount

Average Revenue per User (ARPU) was $11.57 vs $11.38 expected by analysts, according to Street Account

Facebook also said it was hit by privacy changes to Apple’s iOS and macroeconomic challenges. It blamed the lower-than-expected growth in part on inflation and supply chain issues that are impacting advertisers’ budgets.

“On the impressions side, we expect continued headwinds from both increased competition for people’s time and a shift of engagement within our apps towards video surfaces like Reels, which monetize at lower rates than Feed and Stories,” Facebook said.

The report is Facebook’s first since changing the name of its parent company to Meta last fall.

Meta said its Family of Apps saw revenue of $32.79 billion with operating income of $15.89 billion in the fourth quarter. Its Reality Labs segment made $877 million in revenue in the quarter with an operating loss of $3.3 billion.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.