Facebook’s parent company Meta said it expected first-quarter earnings this year to fall short of Wall Street’s expectations due to “increasing competition,” which sent its shares plummeting more than 20% in aftermarket trading.
If the stock doesn’t recover, it will be the worst day for the stock since the company went public in 2012, with nearly $200 billion written off its market value. The decline was roughly equal to Intel’s individual market capitalization and greater than that of McDonald’s and AT&T.
Fast-growing tech companies come under considerable pressure this year as investors brace for tighter policy from the Federal Reserve. The Nasdaq Composite stock index had its worst month in January since the coronavirus hit US financial markets in March 2020.
Along with intense volatility at the start of the year, traders warned of extreme “air pockets” in the market, with prices moving much more drastically than expected as per the day’s news.
Late last month, Netflix shares had their biggest drop in nearly a decade after the company’s guidance fell short of expectations. Paypal, which was below expectations on Tuesday (1st), fell almost 25% during trading on Wednesday, losing US$ 51 billion (R$ 270 billion) in the company’s valuation.
Spotify also released a disappointing outlook for subscriber growth in the first quarter on Wednesday, sending its shares down as much as 23% in after-hours trading before rebounding to trade about 10% lower.
Meta posted an 8% year-on-year fall in fourth-quarter profits to $10.2 billion, pressured by its investment in the virtual world full of digital avatars known as the metaverse, as well as increased spending on its field of virtual and augmented reality technologies.
Meta said it expects revenues in the first quarter of 2022 to be in the range of $27 billion to $29 billion, equivalent to 3% to 11% year-over-year growth.
This was below analyst expectations for first-quarter revenue of $30.3 billion, according to S&P Capital IQ, and marks a slowdown from the 20% increase in revenue. in the last quarter of 2021, when the company generated US$ 33.7 billion (R$ 178 billion).
Meta blamed “increased competition for people’s time” as well as “a shift in engagement with our apps” to watching more short videos, which generate less money than the advertising that appears in your feed.
The company also cited the impact of Apple’s new privacy changes, which include requiring apps to secure explicit authorization to track users and send targeted advertising.
The mediocre results come as the social media company struggles to maintain its top spot among teens and younger users on Facebook and the Instagram app. Privacy and moderation scandals have crippled the group as it also faces fierce competition from ByteDance’s Snapchat and TikTok apps.
That threatened its ad-based business model and prompted chief executive Mark Zuckerberg to say last year that the company was “restocking” its teams “to make serving young adults the guiding star.”
Monthly active users rose 4% from a year earlier to 2.91 billion, below analyst estimates of 3 billion.
Translated by Luiz Roberto M. Gonçalves
Source: Folha
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