Meta, the parent company of Facebook, saw its stock drop more than 23% on Thursday as the firm anticipated lower-than-expected revenue growth in the coming quarter. It also revealed that Apple’s privacy policies are having a significant impact on it, with the first quarterly fall in daily active users on record.
The stock is on track to have its greatest single-day plunge ever, surpassing the 19 percent drop it experienced in July 2018. The decline on Thursday is expected to cut around $210 billion off its market capitalization, bringing it to around $689 billion.
According to Refinitiv, the company, which announced earnings under its new name for the first time with a new reporting structure, missed earnings projections for the fourth quarter, coming in at $3.67 vs $3.84 analysts expected. However, revenue for the quarter was more than expected, at $33.67 billion vs $33.4 billion.
Nonetheless, according to Refinitiv, its first-quarter revenue prediction of $27 billion to $29 billion fell short of analyst expectations of $30.15 billion.
Apple’s iPhone privacy improvements, which affect ad targeting and measurement, are expected to cost the business $10 billion this year, according to the company. Advertiser budgets are also being weighed down by macroeconomic difficulties such as inflation and supply chain interruptions, according to the report.
Facebook is also investing more aggressively on products like Reels on Instagram, which produce less revenue in the short term but have a large growth potential, according to officials. In the quarter, the company’s main social media business, which is reported under its Family of Apps, generated $32.79 billion in sales and $15.89 billion in operating profits.
For the first time, Meta separated its Reality Labs sector, which includes its future-focused business that aspires to establish the metaverse. In the fourth quarter, the sector generated $877 million in revenue while incurring a $3.3 billion operating deficit. Last year, the division lost $10 billion, and its losses are increasing as it invests on the metaverse.
Following Facebook’s drop, other social media stocks were down on Thursday. Snap’s stock has dropped by more than 18%. Pinterest shares are down 5% on Thursday, while Twitter shares are down more than 4%.
