Facebook shares down 22%

3 February 2022
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2 min.
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Facebook shares down 22%

Meta Platforms report and shares

Shares in Meta Platforms (FB), formerly Facebook, which has lost 10% in the past six months, fell 22.9% in after-hours trading on Wednesday after the social media giant released a disappointing 2021 report and announced its 2022 outlook.

Meta report

Q4 earnings per share fell 5% from the same quarter in 2020 to $3.67. This was below market analysts' average forecasts of $3.84.

Also, the company noted that total revenues rose 20% to a new record of $33.67bn, beating Wall Street estimates of $33.4bn.

For the entire 4th quarter, considered seasonally the strongest of the year for digital advertising due to the Christmas holiday, Meta Platforms added no new users (DAU, MAU) to its family of applications compared to Q3.

However, the number of daily active users (DAU) in Q4 was 1.93 billion, unchanged from Q3 and below analysts' forecasts of 1.95 billion.

The number of monthly active users (MAU) also remained unchanged: 2.91 billion, while analysts' estimates were 2.95 billion. On the positive side, average revenue per user (ARPU) rose to $11.57, better than the expected $11.38.

Facebook forecasts

Disappointing were the 2022 forecasts made by Meta management.

First, negative macro factors in the form of inflation and supply chain issues affecting advertisers' budgets.

Second, Shifting user engagement to digital products such as video feature Reels, which generate less revenue than Feed and Stories newsfeeds.

Third, Facebook said it could lose about $10 billion in 2022 due to iOS privacy policy changes.

And fourth, an increase in spending on its so far loss-making Reality Labs division.

Meta Reality Labs revenue and loss statistics for the last 3 years:

  • Loss (net loss) in 2019: $4.5bn on revenues of $501m.
  • Loss in 2020: $6.62 billion on revenues of $1.14 billion.
  • Loss in 2021: $10.19bn on revenues of $2.27bn. Moreover, Meta chief financial officer David Wehner said during a report on Wednesday that operating losses will "increase significantly" in 2022.

The losses also affected Meta's overall profitability for 2021. The company would have made more than $56 billion in net income for all of last year, rather than $39.37 billion, had it not been for Reality Labs.

Also, GlobalNY.biz recently wrote that Meta has sold its cryptocurrency project Diem. Amid Facebook's disappointing report, shares of other companies with social media platforms also fell.

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