© Stocksak. FILE PHOTO – Facebook’s new logo Meta can be seen on smartphones in this illustration taken October 28, 2021. REUTERS/Dado Ruvic/Illustration
By Chavi Mehta & Katie Paul
(Stocksak). – Facebook (NASDAQ) parent Meta Platforms Inc forecast Wednesday a weak holiday quarter, with significant losses from Metaverse investments next Year. This sent shares down 14%
The forecast reduced the stock market value of Meta by about $40 billion in extended trade. Meta is facing disappointing prospects, including slowing global economic expansion, competition from TikTok as well as concerns about massive spending in the Metaverse and the ever-present threat regulation.
Meta expects to have about the same number employees in 2023 as it had at the end September.
Facebook and Instagram beat all estimates for quarterly revenue. This was down 4% from $29 billion last fiscal year.
This accelerated a revenue decline that began in the previous quarter. The company saw a 0.9% revenue drop, but it was less than the 5.6% decline Wall Street expected, according IBES data from Refinitiv.
GRAPHIC: Meta’s revenue fell for a second straight quarter https://graphics.reuters.com/METAPLATFORMS-RESULTS/dwvkrbbwbpm/chart.png
It also posted user growth figures that were roughly in line with expectations. This includes a year-overyear increase in monthly active users on Facebook’s flagship app.
CEO Mark Zuckerberg stated that Reels, a TikTok-like short video product called Reels, now has more than 140 billion plays across Facebook & Instagram, an increase of 50% over six months ago.
Reels’ revenue runs rates across Instagram, Facebook, and Twitter are now at $3 billion. Reels is seen being shared more than 1,000,000 times per day, which he believes is a major advantage over TikTok.
Even more troubling was the company’s estimate of fourth-quarter revenue in the $30 billion to $32.5 Billion range, compared to analysts’ estimates at $32.2 billion according to the Refinitiv Data.
Meta also predicted that its full-year 2023 total expenditures would be between $96 billion and $101 billion, an increase from the revised 2022 total expenses estimate of $85 billion or $87 billion.
This includes $2.9 billion in 2022 and 2023 charges related to “consolidating office facilities footprint.”
The third quarter’s total costs were $22.1 billion higher than expected, compared to $18.6 million the year before. Analysts had expected $20.6 billion.
“The concern for Meta is that this pain will continue into 2023, as cost headwinds still remain a real challenge” said Ben Barringer of Quilter Cheviot, equity research analyst.
“Given that revenues were down at a point when costs have increased significantly, modest user growth isn’t going help you out.”
The third quarter net income fell to $4.40Billion, or $1.64 per Share, from $9.19Billion or $3.22 Per Share a year earlier. This is the worst performance since 2019 and the fourth consecutive quarter of profit decline.
Analysts had predicted a profit of $1.86/share.