Meta shares plunge 20% as Facebook feels heat from Apple – and TikTok

A new 3D printed Facebook brand logo Meta is placed on the laptop keyboard in this illustration taken November 2, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

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Feb 2 (Reuters) – Shares of Facebook owner Meta Platforms Inc (FB.O) plunged more than 20% late on Wednesday as the social media company issued a weaker-than-expected forecast, blaming privacy changes from Apple and increased competition for users from rivals like TikTok.

Meta, which missed Wall Street’s earnings estimates, said it was hit by Apple Inc’s (AAPL.O) privacy changes to its operating system, which made it harder for brands target and measure their ads on Facebook and Instagram. He also cited macroeconomic issues such as supply chain disruptions. Read more

The 18-year-old tech giant, which is also under pressure from platforms such as TikTok and YouTube, said it expects revenue growth to slow in the next quarter due to a increased competition for user time and a shift in commitment to features such as its short video. offer Reels, which generate less revenue.

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Facebook reported 2.91 billion monthly active users in the fourth quarter, showing no growth from the previous quarter.

Meta shares’ after-hours tumble vaporized $200 billion of its market value, with another $15 billion lost from peers Twitter Inc (TWTR.N), Snap Inc (SNAP.N) and Pinterest Inc (PINS.N). Read more

Shares of Alphabet Inc (GOOGL.O), which posted record quarterly sales that beat expectations on Tuesday, fell nearly 2%. Read more

Meta, which owns the world’s second-largest digital advertising platform after Google, previously warned that its advertising business faced “significant uncertainty” in the fourth quarter. Read more

Meta CFO Dave Wehner told analysts on a conference call that the impact of Apple’s privacy changes could be “in the order of $10 billion” for 2022.

Apple’s changes to its operating software give users the choice to block apps from tracking their online activity for ads, making it harder for advertisers who rely on the data to develop new products and know their market. Read more

Meta forecasts first-quarter revenue of $27 billion to $29 billion. Analysts had expected $30.15 billion, according to IBES data from Refinitiv.

“It’s clear that there are many hurdles to overcome as Meta faces fierce new competition for ad revenue such as TikTok, and faces the continued ad targeting and measurement challenges related to Apple’s iOS changes,” said Insider Intelligence analyst Debra Aho Williamson.

The company’s total revenue, the bulk of which comes from ad sales, rose to $33.67 billion in the fourth quarter from $28.07 billion a year earlier, beating analysts’ estimates $33.40 billion, according to IBES data from Refinitiv.

“I am encouraged by the progress we have made over the past year in a number of important growth areas such as Reels, Commerce and Virtual Reality, and we will continue to invest in these key priorities and others as they arise. 2022 as we work to build the metaverse,” CEO Mark Zuckerberg said in the earnings release.

In Meta’s earnings call, he said competition for users was one of the factors impacting the business, mentioning the name of the short video app TikTok and highlighting Meta’s commitment to provide services to young adults.

Net loss at Meta’s Reality Labs, the company’s augmented and virtual reality business, was $10.2 billion for the full year of 2021, compared with a loss of $6.6 billion. dollars the previous year. It was the first time the company had broken down this segment in its results.

Zuckerberg previously warned that the company’s investment in this area would reduce 2021 operating profit by $10 billion and would not be profitable “at any time in the near future.”

Reality Labs reported revenue of around $2.3 billion in 2021. The company has not released sales figures for its Quest virtual reality headsets.

The company announced on Wednesday that it will change its ticker symbol to “META” this year, the latest step in its rebranding to focus on the Metaverse, a futuristic idea of ​​virtual environments where users can work, socialize and play. . Meta has not commented on the price of a deal with Roundhill Investments, which said in January it would stop using the symbol for its Roundhill Ball Metaverse ETF.

The tech giant, which changed its name in October to reflect its Metaverse goals, is betting that the Metaverse will be the successor to the mobile internet.

“Investors watching Meta are starting to realize that buying their stock is no longer primarily an investment in their advertising platform,” said Flynn Zaiger, CEO of social media agency Online Optimism. “Investing in Meta now feels more like a commitment than you believe the Metaverse will replace much of the Internet consumer experience today.”

Meta’s rebrand comes at a time when lawmakers and regulators are increasingly scrutinizing allegations of anti-competitive behavior and the impacts of how it deals with harmful or misleading content on its Facebook and Instagram platforms. Read more

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Reporting by Nivedita Balu in Bengaluru and Elizabeth Culliford in New York Additional reporting by Noel Randewich in Oakland, California, and Sheila Dang in Dallas Editing by Anil D’Silva, Peter Henderson and Matthew Lewis

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