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Author: Alan LittleDate: 2022-02-04

Meta (FB) -26% after surprise fall in Facebook’s user numbers

Meta (FB) shares took a battering on Thursday as investors reacted to a Q4 earnings miss, weak Q1 guidance and a drop in Facebook’s daily active user numbers.

Facebook owner Meta (FB) plunged 26% in trading on Thursday after the tech company missed Q4 earnings estimates and said that daily active users (DAUs) fell for the first time ever.

For the three months to 31st December, Facebook posted $3.67 earnings per share, which was 11 cents down from a year ago and 17 cents short of the $3.84 Wall Street consensus.

Group revenues fared better as a 20% year-over-year spike to $33.6bn was just enough to ease past the $33.4bn forecasts, but weak Q1 guidance took the shine off that beat.

Meta said that revenue could dip to just $27bn in Q1, with the higher range of $29bn still behind the $30bn that analysts were hoping for.

Reacting to the report, Hargreaves Lansdown analyst Laura Hoy said that the latest numbers had burst CEO Mark Zuckerberg’s “metaverse bubble”.

She believes that the next 12 months are shaping up to be a “bumpy, and expensive, ride” for Meta as it looks to increase its investment in the metaverse, which already accounted for $12.5bn in spend last year.

Weakness in the Facebook platform is also a concern after the number of DAUs fell from 1.93 billion to 1.929 billion, a small but significant turn of events.

Facebook’s ad business has also struggled in the wake of Apple’s (AAPL) recent privacy changes to iOS, which will hit revenue by around $10bn this year, according to Meta CFO Dave Wehner.

A number of other headwinds are also prevalent, including supply chain issues and inflation.

After shares tumbled 26% and wiped more than $200bn from Meta’s market cap, Hoy concluded that investors had given the company a “thumbs down” amid broader tech sector “jitters”.

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