Investors wiped nearly $200 billion off the market valuation of Facebook owner Meta as it warned that its users were spending more time on newer competitors like ByteDance’s TikTok.
The company’s shares plummeted more than 20% in after-hours trading on Wednesday after Meta said it expected its first-quarter revenue to fall short of Wall Street expectations because ” increasing competition”.
If the stock doesn’t recover, it will be the worst day for the stock since the social media group went public in 2012 and one of the biggest declines in a company’s market value. is recognized.
Mark Zuckerberg, chief executive officer, warned in a call with analysts: “People have a lot of choices about how they want to spend their time, and apps like TikTok are evolving very quickly. . Competition will put short-term pressure on Meta advertising businesshe added.
While the Google owner took Recent Apple Privacy Changes In its move, Meta says it’s still experiencing new policies that make it harder to track users and target ads.
“There is a clear trend that there is less data to deliver personalized ads,” said Zuckerberg.
Some technology companies have been pressure this year as investors grow nervous at signs of slowing growth and as the Federal Reserve prepares to tighten policy. The tech-heavy Nasdaq Composite was hit worst month in January since the coronavirus first rocked financial markets in March 2020.
At the end of last month, Netflix shares fall their most in nearly a decade after the company’s guidance fell short of expectations. PayPal, that miss expectations on Tuesday, fell nearly 25% the next day, cutting $51 billion off the company’s valuation.
Meta . Q4 earnings summary
Actually than estimated
Turnover: $33.7 billion against $33.4 billion
Net income: 10.3 billion dollars compared to 11 billion dollars
EPS: $3.67 against $3.83
Sell ads: 32.6 billion USD compared to $32.5 billion $ billion
Monthly active users: 2.91 billion won compared to 3 billion
Estimated source: S&P Capital IQ and Refinitiv
Spotify also posted a disappointing outlook for first-quarter subscriber growth on Wednesday, sending its shares down as much as 23% in after-hours trading before they recovered to trade about 10% lower.
Meta said it expects revenue for the first quarter of 2022 to be in the $27 billion to $29 billion range, representing a growth of 3 to 11 percent year-over-year.
That’s below expectations for first-quarter revenue of $30.3 billion, according to S&P Capital IQ, and will essentially be the slowest period of growth in Facebook’s history, analysts say. , according to analysts.
Fourth-quarter profit was squeezed by invest in a world full of digital avatars known as the metaverse, as well as higher spending on its virtual and augmented reality technology arm.
Facebook’s monthly active user base remained flat at 2.91 billion, below analyst estimates of 3 billion.
In addition to the “increasing competition for everyone’s time,” Meta blamed the poor performance on “a shift in engagement in our apps.” It said people were watching more short-form videos that brought in less money than the ads that appeared in its feed.
The social media company has struggled to maintain its edge with teenagers and young users, while a series of privacy and censorship scandals have damaged its reputation. company.
Zuckerberg last year announced that the company would “retool. . . to make youth service the northern star”, focusing on Reels, its TikTok clone.
Meta on Wednesday also warned that macroeconomic challenges such as inflation and supply chain disruptions are affecting advertisers’ budgets.
#techFT brings you news, commentary and analysis on the major companies, technologies and issues shaping the fastest-moving of these fields from experts around the world. Click here to get #techFT in your inbox.