Facebook stock plummets 22% after reporting weak guidance
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Mark Zuckerberg, Facebook CEO and Chairman of the Board testifies before the House Financial Services Committee in Washington on October 23, 2019.
Erin Scott | Reuters
Facebook Parent Shares MetaPremarket trading on Thursday was down by more than 22% after the company forecastedIt reported a weaker than anticipated revenue growth for its next quarter, and revealed that its Reality Labs metaverse section, its major bet for its future, had lost $10 Billion last year.
Refinitiv reported that earnings were released by the company under a new name, but missed analysts’ expectations of $3.67. It beat the estimate for revenue at $33.67 Billion vs $33.4 Billion.
However, Refinitiv reported that the company’s revenue projection of $27-$29 Billion for its first quarter was below analyst estimates of $30.15B.
After Facebook’s collapse, other social media stocks fell Thursday. Shares in SnapPremarket trading saw a drop of more than 16% PinterestShares are falling by 9% TwitterStocks fall more than 7%
Meta’s Reality Labs segment was launched for the first times. It is a future-focused company that seeks to create the metaverse. This segment had an operating loss $3.3 billion and generated revenue of $877 millions in its fourth quarter. This is the The segment lost $10 billion last yearIt is losing more money as it places bets in the metaverse.
Facebook also invests more in products with lower revenue but high growth potential. Reels is an example of this.
Company’s core social media company reported under Family of Apps. It generated revenue of $32.79Billion and had an operating income of $15.89B.
According to the company, Apple privacy changes that affect its advertising-targeting, measuring and targeting would lead to a $10 billion revenue hit this year. The report also stated that advertisers are facing macroeconomic problems like inflation, supply chain disruptions and other challenges.
JPMorganAnalysts downgraded the stockThey changed from neutral to overweight on Thursday and dropped their price target to $385 from $284. Meta is experiencing a slowdown in advertising growth as it embarks on a multi-year, expensive and uncertain transition to the Metaverse, according to analysts.
WATCH: Has Meta lost its way? Here are both sides of the issue
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