The weak holiday quarter forecast knocked about $40 billion off Meta’s stock market value in extended trading.
Facebook’s parent company, Meta Platforms Inc, has forecast a weak holiday quarter and significantly more losses from investments in Metaverse next year, sending the stock down 14%.
Wednesday’s forecast knocked about $40 billion off its stock market value in extended trading. In addition to the disappointing outlook, Meta is facing slowing global economic growth, competition from TikTok, concerns about significant spending on Metaverse, and the current threat of regulation.
Facebook’s parent company beat estimates for quarterly revenue, falling 4% to $27.7 billion in the third quarter ended September 30, from $29 billion last year.
That adds to the decline in revenue that began last quarter, when the company posted decrease in revenue for the first time was 0.9%, but less than the 5.6% drop Wall Street had expected, according to IBES data from Refinitiv.
Meta also posted user growth metrics that were roughly in line with expectations, including the year-over-year increase in monthly active users on the flagship app Facebook.
More worrisome is the company’s estimate that fourth-quarter revenue will be between $30 billion and $32.5 billion, well below analyst estimates of $32.2 billion.
Meta also forecasts that total costs for 2023 will be between $96 billion and $101 billion, up from a revised estimate for 2022 with a total cost of $85 billion to $87 billion.
That includes an estimated $2.9 billion in fees in 2022 and 2023 related to “consolidating our office facilities.”
Meta says it is downsizing its headcount on some teams and investing in headcount growth “only among our highest priorities”.
Total costs for the third quarter were above estimates at $22.1 billion, compared with $18.6 billion the year before. Analysts had forecast about $20.6 billion.
Net income for the third quarter fell to $4.40 billion, or $1.64 per share, from $9.19 billion, or $3.22 per share, a year earlier, this was The company’s worst results since 2019 and a fourth straight quarter of profit decline.
Analysts were expecting a profit of $1.86 per share.
“The worry for Meta is that this pain is likely to continue into 2023 as cost constraints remain a challenge,” said Ben Barringer, equity research analyst at Quilter Cheviot. real and strong dollar affect earnings abroad”.
“Given that revenue has dropped at a time when costs have increased significantly, modest user and impression growth simply won’t get you out.”
Meta is the latest and among the biggest ad-dependent tech companies to be hit by a decline in marketing spending as inflation soars. On Tuesday, Google’s parent alphabet missed the estimates for quarterly revenue. Previously, Snap Inc, the owner of the photo messaging app Snapchat, saw stocks up 25 percent after it posted its slowest revenue growth since it went public five years ago.