Facebook’s Meta is facing historically bad news: After the social media giant reported a mixed bag of earnings results, including its first sequential drop in daily active users, executives woke up to find the group’s share price plunged overnight into Thursday by more than 26 percent. They still haven’t recovered.
The stock closed Wednesday at $323, but clocked in early Thursday at $238.90. At press time, they sat at $237.61. Altogether, Wall Street’s jitters blasted some $200 billion off of Meta’s value, in what looks like the largest single-day drop in market history.
But it speaks to Meta’s massive operation that even this may not derail the company. After all, it’s not exactly hurting for money. The owner of Facebook, WhatsApp, Instagram and Meta Quest, the group is still worth more than $670 billion, with fourth quarter 2021 revenue of $33.67 billion, including ad revenue of $32.6 billion. Both figures edged out analysts’ expectations.
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However, Meta also revealed the downward trajectory of daily users and rather disappointing earnings per share, with $3.67 sliding in under expectations. Even worse, the company forecasted the current quarter below what analysts projected, with an estimated range of $27 billion to $29 billion in revenue falling short of $30.25 billion. Then it warned investors that Apple’s changes to iOS, which have already become a thorn in the side for Meta by complicating or thwarting ad targeting, will be rather costly this year as well — to the tune of billions.
Chief financial officer David Wehner said on the call with analysts that “the impact of iOS overall as a headwind on our business in 2022 is on the order of $10 billion,” describing it as “a pretty significant headwind.”
The pressure is on now to strengthen the business, both in the near and long term. It likely means making all of its platforms work more efficiently together behind the scenes, while putting even more attention on Instagram, which has been its jewel in the crown. As it is, the company has been plying creators and advertisers with incentives and bolstering social commerce. Now it may need to crank up these and other efforts, while it tries to stop the bleed of users.
But the long game is the metaverse, so it must keep the momentum going at the same time. It has already rebranded Oculus, its virtual reality outfit, and pulled it more to the center of the company, while work continues on Project Nazaré, its upcoming augmented reality glasses. Meta can afford to lose a lot, but it can’t afford to lose sight of any of that. Because the stakes appear to have jumped sky-high now.