Meta stocks plummeted on the bourse on Thursday after the company that owns Facebook and Instagram reported a second straight quarterly revenue decline and forecasted another drop in the fourth quarter.
Meta shares crashed over 24 percent, down $31.88 in single-day trading to its current price of $97.94 – its lowest level in nearly four years.
This follows its earnings report on Thursday, where it filed that net income in the third quarter fell 52 percent to $4.4 billion, which was way below estimates for $5 billion. Revenues fell 4 percent to $27.71 billion, which was the slowest pace of growth since the company went public in 2012. Last quarter, it had reported a decline of 1 percent.
Mark Zuckerberg, Meta founder and CEO, said: “Our community continues to grow and I’m pleased with the strong engagement we’re seeing driven by progress on our discovery engine and products like Reels.
“While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth. We’re approaching 2023 with a focus on prioritisation and efficiency that will help us navigate the current environment and emerge an even stronger company.”
Meta’s costs and expenses rose 19 percent year-over-year to $22.1 billion.
Cumulative losses this year alone from Reality Labs, its metaverse unit, has reached $9.4 billion in the first nine months. Its founder Mark Zuckerberg’s pet project and led to the name-change and re-branding of the group late last year. Meta said it expected operating losses in Reality Lab to “grow significantly year over year”.
Revenues from Reality Labs nearly halved in the third quarter to $285 million while losses were $3.7 billion compared with $2.6 billion a year ago.
Meta also warned that the fourth quarter results are expected to be more of the same. It issued an outlook expecting revenue for the fourth quarter to be in the region of $30 billion to $32.5 billion.
Apart from the cash-guzzling Reality Lab, experts say Meta is facing a number of challenges, chief among them being the rising competition from TikTok for Instagram, and the difficulties in targeting and measuring advertising because of Apple’s privacy policy changes.
The Meta CEO has a 13 percent stake in the company which would mean Zucketberg’s net worth has slipped by $90bn so far this year. His holding stood at just over $125 billion at the start of 2022, according to Bloomberg data, but its value has now fallen to $37.7 billion – down from a peak of $102 billion, when he was the third richest in August 2020 – making him the 28th richest man in the world.
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