- $70 billion wiped off market cap as shares slump 20%
- Facebook, Instagram, Whatsapp users edge higher
- Q4 revenue steer comes in below previous forecasts
Facebook-owner Meta Platforms (META:NASDAQ) became the latest victim of falling online advertising demand after third-quarter results missed analyst estimates and the company warned of weakness hitting Q4 numbers.
The warning signs were there, following weak guidance from first Snap (SNAP:NYSE) then Alphabet (GOOG:NASDAQ), Meta shares plunged 20% in after-hours trading, falling to their lowest since 2015 and wiping about $70 billion off its market cap. The company is currently valued at approximately $280 billion at $103.60 per share.
The social media and metaverse company reported earnings per share of $1.64, $0.29 worse than the consensus analyst estimate of $1.93, while revenue for the quarter came in at $27.71 billion versus the $27.57 billion forecast. Revenue fell 4% year-on-year, with the company stating that foreign exchange headwinds impacted the quarter.
PEOPLE STILL USING FACEBOOK
Family daily active people, which is classed as someone who registered and logged-in to Facebook, Instagram, Messenger, and/or WhatsApp, came in at 2.93 billion on average for September 2022, a rise of 4% year-over-year. Family monthly active people also increased by 4% to 3.71 billion.
Meta is facing increasingly stiff competition from the likes of TikTok, Snap, YouTube, who are eating its lunch among younger consumers.
Meta's headcount, which has been of much debate recently, was 87,314 as of 30 September, 28% higher on a year ago, but the company seems to have listened to recent calls to reduce spending and its staff numbers, with the company saying that it is making significant changes across the board to operate more efficiently, including holding some team numbers flat, shrinking other teams, and ‘investing headcount growth only in our highest priorities.’
As a result, Meta expects its headcount at the end of 2023 will be approximately in-line with third-quarter 2022 levels. Operating costs of $22.05 billion were 19% higher than this time last year, although the number does include a one-off $413 million impairment for certain operating leases as part of Meta’s ongoing work to align its office facilities footprint.
ZUCKERBERG SELLING LONG-TERM CASE
‘While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth,’ the company said in a statement. ‘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,’ commented Mark Zuckerberg, Meta founder and CEO.
Meta sees fourth-quarter total revenue to be in the range of $30 billion to $32.5 billion, versus consensus of $32.68 billion, according to Investing.com data.
Meta said operating losses in 2023 for its Reality Labs division will grow ‘significantly’ next year and beyond as it ploughs money into the metaverse.
‘Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run,’ Meta stated.
