After Facebook’s parent company issued a dismal prediction for the fourth quarter and missed Wall Street’s earnings estimates, Meta shares continued their freefall into 2022 and fell 19% in extended trading on Wednesday.
A general downturn in online advertising spending, difficulties with Apple’s iOS privacy change, and heightened competition from TikTok are all issues that Meta is battling. All things considered, Meta has reported declining revenue for two consecutive quarters and is predicted to report its third consecutive decline in the fourth quarter.
The business forecast that fourth-quarter revenue will range between $30 billion and $32.5 billion. Analysts anticipated $32.2 billion in sales.
The third quarter saw a 4% decline in sales, but Meta’s costs and expenses increased 19% year over year to $22.1 billion. To $5.66 billion, operating profits decreased 46% over the prior year.
The operating margin for Meta decreased from 36% to 20%, representing the income left over after covering operational expenses. In the third quarter, overall net income decreased by 52% to $4.4 billion.
Meta is trading at its lowest level since March 2016, eight months before Donald Trump was elected president, at its after-hours levels of roughly $108.
The company’s virtual reality headsets and futuristic metaverse business are both housed in the Reality Labs division, which saw a nearly 50% decrease in revenue from a year ago to $285 million.
Its loss increased from $2.63 billion in the same quarter last year to $3.67 billion this quarter.
This year, Reality Labs has lost $9.4 billion, and there doesn’t seem to be any end in sight.
In the U.S. and Canada, Meta reported having 197 million daily active users in the period, up from 196 million in the corresponding quarter in 2020. The majority of Meta’s income comes from users in North America.
The analysis from Meta is the most recent indication that there is problems in the internet advertising sector, which is already suffering from issues like Apple’s 2021 iOS privacy update and concerns about an upcoming recession. Companies have cut back on their marketing and advertising campaigns as a result of these worries.
A day after Snap reported weaker-than-expected revenue last week, which executives blamed on platform changes and a deteriorating economy, the company’s shares plunged 30%.
Alphabet’s third-quarter results announcement, which again disappointed investors, caused the company’s share price to drop by the most on Wednesday since March 2020. Alphabet Chief Financial Officer Ruth Porat stated that the reduction “mainly reflects continuing pullbacks in advertiser spends” after the YouTube division announced a 2% year-over-year sales decline.
Even Microsoft wasn’t immune; the computer behemoth reported declining growth rates for both its LinkedIn operation and its search and news advertising business. The delay was attributed by Microsoft CFO Amy Hood to “reductions in consumer advertising spend.”,
