Why Facebook parent Metas stock is getting crushed

Big technology earnings have prompted some extreme share price moves this season, with Wall Streets expectations seemingly misaligned with company realities. Since crashing 26% on Feb. 3, following its Q4 earnings report, Meta stock has made four rally attempts to its 50-day line. But each rally has failed, the latest coming on Friday, after social media rival Snap missed Q2 views and failed to offer Q3 guidance. However, Morgan Stanley analysts wrote in a recent report that time spent on Meta’s family of apps fell 1% from a year ago. An even bigger 3% drop in time on Facebook was partly only offset by tepid growth at Instagram.

Facebook should instead fix all of the problems that everyone outside Facebook can see as bright as day. It should rid—or at least truly try to rid—the social network of vitriol and hate. But if the past 18 years are reflective of the future of Facebook, I don’t think anyone expects it to do any of these things. The company increased its share repurchase program by a hefty $50 billion.

Zuckerberg, who holds 55% of the voting shares of Meta, giving him de facto control of the company, saw his personal wealth fall by an estimated $24 billion as a result of Thursday’s market rout. Facebook added just 2 million monthly active users in the quarter, barely moving the needle from the prior quarter. Facebook parent company Meta took a shellacking Thursday following its Wednesday Q4 earnings results, amid a miss on earnings per share and a dreadful outlook for Q1. The markets overall have been volatile in the last few weeks, and the tech sector in particular saw some dips across the board this last month. Twitter, Snap and Pinterest have all been trading lower, and Meta was trading at $237.76 when the market closed on Thursday. Investors are concerned that Facebook will find it difficult to navigate Apple’s new privacy restrictions, which have dented its ability to target its customers‘ ads.

It should be pointed out that overall revenue did grow in the three months to December, up to $33.7bn compared with $28.1bn for the same period last year. Net income – a US measure of profit – was $10.3bn for the quarter, down nearly $1bn on last year. Nonetheless, Meta remains a very wealthy and profitable business. As of Friday’s close, Netflix had a market cap of $99.2 billion, down from over $300 billion in November.

Facebook Faces An Existential Moment After $230 Billion Stock Crash

Facebook has been warning since late 2020 about the challenge created by Apple’s privacy change. But the shift that began with the iOS 14.5 update last spring had a modest impact until Q4. Apple now requires apps downloaded through the App Store to let users opt in or out of tracking their activity across third-party sites. With the bulk of users opting out, businesses can no longer narrowly target advertising to consumers likely to have an interest in their products or services. Internally, Facebook has shifted focus toward the metaverse, a direction that is unlikely to pay off for many years to come.

„People have a lot of choices for how they want to spend their time, and apps like TikTok are growing very quickly, “ Zuckerberg said on a call with investors Wednesday. The odds are good that June 16 marked the stock market’s low, and we are in the early stages of a new bull market. There is enough terror in the market to suggest we are near the bottom. Beyond Apple’s privacy changes, Meta has also seen its user growth slow significantly through the years. During Meta’s earnings call, both CEO Mark Zuckerberg and COO Sheryl Sandberg pointed to Apple’s App Tracking Transparency feature, introduced in April 2021, as the chief problem facing the company’s ads business. Investing in the metaverse, where it hopes to become the go-to company for interconnected digital worlds.

The company’s shares, which were trading at $323 when the markets closed Wednesday, opened on Thursday at $242.48 and never recovered, closing at $237.76. In terms of daily active users, however, Facebook lost 1 million users. That’s a stunning turn of events for a business that has been on a growth spree for the majority of its life. ema forex In the recent earnings call, Zuckerberg acknowledged the impact on business due to the “competitive marketplace” and named TikTok as a major challenger. “People have a lot of choices for how they want to spend their time,” he said, which is why the company is focusing more on Instagram Reels, its short-form video clone of TikTok.

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Of 44 analysts covering Facebook in February, 17 rate the stock a “strong buy” and 24 rate it a “buy,” according to Yahoo Finance. That’s down from January 2021, when 18 rated it a “strong buy” and 30 rated it a “buy,” but analysts see Facebook’s current troubles as temporary. Their average price target is $353.91 — over 49% above the current price. Earnings were $3.67 per share, which fell short of the $3.84 per share analysts expected. Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance.

Last year a whistleblower, Frances Haugen, released internal documents that included presentations warning that Facebook was losing young users. One document revealed that “engagement is declining for teens in most western, and several non-western, countries”. The company blamed privacy changes to Apple’s iOS and macroeconomic challenges weighing on advertiser budgets.

In fact, Meta seems to be doubling down on its promotion of short-form videos, as it tries to make headway against TikTok. On July 21, Meta said that Facebook users will henceforth be directed to a new „Home“ entryway, where they will encounter curated content such as Reels videos. Posts from family and friends will be found by clicking on a new „Feeds“ tab. Oil giant Shell plc reported higher energy prices gave a sharp boost to earnings. The company also hiked its dividend and increased its stock buyback program.

Facebook’s revenue jumped 33% year over year to $29 billion, driven by continued growth in its core digital ad business. Those gains, however, fell short of Wall Street’s expectations for revenue of nearly $29.6 billion. Sank 3.9% on Tuesday, following the release of the social media giant’s third-quarter results. The Facebook parent plunged 26% Thursday on the back of woeful earnings results, and erased about $251.3 billion in market value. That’s the biggest wipeout in market value for any U.S. company ever. Meta shares fell through their 50-day line on Sept. 20, offering a sell signal.

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Zuckerberg also said regulation in Europe and Apple’s privacy changes have impacted its personalized ads business. The company startled investors late Wednesday with a sharper-than-expected decline in profit and a gloomy outlook. That pulled Meta’s shares down 26% Thursday to close at $237.76, its steepest one-day decline since it started trading in 2012. A historic plunge in the stock price of Facebook’s parent company helped yank other tech stocks lower on Wall Street Thursday, abruptly ending a four-day winning streak for the market.

Trying to combat the TikTok threat and up its game with young adults has created another headwind to Meta’s earnings power. Meta is now focused on driving user engagement via its Reels short-form video feature, yet there are „relatively few ads in Reels today,“ Wehner said on Feb. 2. Meta is working on changes to make its ad targeting more effective, despite the impact of privacy-related changes. Using artificial intelligence to predict consumer interest as a substitute for tracking user activity isn’t expected to be a quick fix. Analysts expect Meta earnings to fall 29.6% to $2.55 a share, according to FactSet.

The massive stock drop, which instantly wiped out roughly $200 billion in market value, shows that Facebook’s corporate rebrand to Meta isn’t enough to distract investors from the problems in its core business of social media. Not only was user growth across Facebook, Instagram, and WhatsApp essentially flat last quarter, but the main Facebook app lost 1 million daily users in North America, where it makes the most money through advertising. That drop led to an overall decrease in daily users of Facebook globally, which a company spokesperson confirmed is the first sequential decline in the company’s history. U.S. stocks fell afterdisappointing earningsand guidance from Facebook parent Meta Platforms Inc. raised concerns about growth prospects for technology companies.

A Revenue Beat Doesnt Always Signal an Increase in the Stock Price

Bernstein’s Mark Shmulik keyed in on Meta’s light revenue outlook for the first quarter, which came up about $2 billion shy of the consensus view at the midpoint. Apple’s ownership of its platform and partnership with Google are “definitely true, but ‘saying the quiet part out loud’ likely also piles onto to investors’ competitive anxieties near-term,” Salmon wrote. The younger generation uses Facebook, but a lot less than their older counterparts. It’s had this very, very deep impact on what people like, how they’re viewing content, the role of influencers, the role of dynamic, atomized content. Facebook has become the worst of the bad boys among Big Tech ever since Cambridge Analytica . The continuing placement of profits over people has led to public departures of key employees who have become concerned about the ethics of it all.

Facebook did briefly join the trillion-dollar club last year but is now down to $532.6 billion. He has an outperform rating on the stock but reduced his price target to $350 from $400. The stock plummeted 26% in Thursday trading to log its worst single-day percentage decline on record.

Meta Platforms Inc.’s one-day crash now ranks as the worst in stock-market history. Get Started Learn how you can make more money with IBD’s investing tools, top-performing stock lists, and educational content. Average revenue per unit measures the amount of money that a company earns for each customer. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Investopedia does not include all offers available in the marketplace. Shares of Qualcomm Inc. are sliding despite strong earnings and guidance for future earnings.

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Zuckerberg is pinning much of his company’s hopes on the metaverse as a means to restore user growth. It’s why he renamed the company Meta and is focusing on releasing new VR and AR headsets. Investors dumped shares of the tech giant after being alarmed by both declining user growth and rising expenses tied to the company’s focus on augmented and virtual realities. Shares of Meta plunged following a dismal quarterly earnings easymarkets broker review report in which the company issued weaker-than-expected revenue guidance and warned of several challenges to its business this year. The sharp drop in the company’s market capitalization, which now stands at around $670 billion, is on pace to be the biggest wipeout ever in U.S. market history, according to Bloomberg data. Meta stock information at the Nasdaq MarketSite in New York, U.S., on Thursday, Feb. 3, 2022.

Apple and TikTok are leading to decreased ad revenue and users for the social media giant

Facebook offered somewhat muted guidance to account for these challenges. Management anticipates revenue of $31.5 billion to $34 billion in the fourth quarter, while analysts‘ forecasts had called for $34.8 billion in sales. Apple and TikTok are leading to decreased ad revenue and users for the social media giant. Meta management has compared its current transition to Reels monetization to earlier successful content transitions, like the shift to Stories and mobile.

Not all cruise industry news come from the CDC and some new data suggests smoother seas ahead for all the cruise lines. Wehner laid out the problem in starker terms saying the company will miss out on $10 billion due to iOS’s privacy settings. I agree with TheWrap’s Terms of Service and Privacy Policy and provide my consent to receive marketing communications from them. Additionally, Facebook is dealing with a maelstrom of criticism and scrutiny from regulators after numerous reports of the company failing to properly address misinformation, hate speech, and other troubling behavior on its sites. That frontier will be three-dimensional, allowing for immersive experiences.

When the country enters a recession, the stock market often takes a beating. But there are some stocks that do better than others when there’s an economic contraction. Before you decide to buy a stock like Facebook, you want to make sure your portfolio isn’t too heavily concentrated in technology stocks. This sector has had a good run recently, so it may represent a larger percentage of your portfolio than you think. That’s not necessarily a bad thing, but you may want to sell some of your other tech holdings if you decide to buy Facebook.

Why Facebook parent Metas stock is getting crushed

User growth has run out of steam amid growing competition, while privacy changes have undercut its display advertising dominance. At the same time, Meta is still spending a lot to position for metaverse potential that may not come to fruition for years. All that makes it harder to have faith in the strength of Meta’s rebound, which will be postponed until recession clouds disperse. In Q1, Meta’s Reality Labs division, focused on growing the metaverse via augmented- and virtual-reality headsets and software, lost $2.96 billion in the quarter on revenue of $695 million. Mizhuo analyst James Lee said in a Monday report that he expects Meta sales to slip 2% from a year ago in Q2. He also commented that consensus estimates for the second half of 2022 and next year both „appear aggressive.“ Yet, Lee kept a buy rating.

Microsoft Corp. missed expectations for profit and revenue in a Tuesday earnings report, as deteriorating economic conditions led to an even greater shock than expected when executives revised their guidance at the beginning of June. Average revenue per Meta family of apps users grew from $7.38 in Q to $9.39 in Q4 2021. Without accurate ad targeting, advertisers will shift away from services like Meta and spend their advertising budgets on other platforms or services. Investors fled the company’s stock Thursday, sending it plummeting more than 26% to $237.76 per share.

Facebook Shares Hammered on Outlook, Driving Markets Lower

TheIBD Big Cap 20 indexoffers a selection of the very best large-cap stocks. Be sure to read IBD’s after-the-close The Big Picture column each day to make sure growth investors have a green light. The brunt of the hit to year-over-year growth is likely to be felt in the first half of 2022, since the impact of the iOS change wasn’t really felt until the second half of 2021. In its Q1 report, Meta scaled back total-year expenses to a range of $87 billion-$92 billion from the prior outlook of $90-$95 billion.

Interest rates for the second time in less than three months, moving the rate to .5%. This is the first time the BOE has consecutively raised rates since 2004. TheEuropean Central Bank announced it will be keeping its short-term interest rates unchanged, despite pressures over rising inflation. But while Wall legacyfx review Street’s metaverse optimism appears to fall well short off Zuckerberg’s, Meta’s rivals are ramping up their own metaverse projects. This includes Apple, Google and Microsoft, which recently bought the video game company Activision Blizzard with the hopes of accelerating its ambitions for the metaverse.