Facebook loses fifth of value overnight – despite soaring ad sales
Meta chief Mark Zuckerberg. Pic: Creative Commons/Anthony Quintano
Facebook parent Meta's share price tanked in after hours trading after investors were spooked by rising costs and weaker share earnings while the company invests increasing sums to own the metaverse. The firm also warned of a weaker Q1 and a potential advertising downturn as global supply chain issues force brands to tighten belts.
What you need to know:
- Ad revenue remains strong, with average prices up 24 per cent over 2021, while Facebook pushed 10 per cent more ads to its users across all apps across 2021.
- But more headwinds incoming from Apple, regulators and supply chain crunch.
- Losses increasing at Reality Labs, low revenue growth forecast for Q1 2022.
Facebook – now known as Meta – saw its share price tumble by more than 20 per cent in after hours trading on the back of Q4 results.
While ad revenue increased YOY and on prior quarter, analysts suggested investors were spooked by a combination of weaker than expected earnings per share, increasing costs associated with its Reality Labs unit, continued headwinds from competitor actions, including Apple, plus broader economic challenges, including global supply chain pressures now threatening to reduce marketer budgets, and increasing threat of further data regulation.
Meanwhile, daily active user number dipped quarter on quarter for the first time ever, and profits declined by 8 per cent YoY.
Fourth quarter ad revenue climbed 20 per cent year on year to US$32.6bn. Facebook pushed 10 per cent more ads to its users with buyers paying 24 per cent more for them on average across 2021 versus calendar 2020.
The company warned that revenue growth for the first quarter 2022 could be as low as 3 per cent. Reality Lab losses increased to US$3.3bn for the fourth quarter.
Facebook also this week officially abandoned its plans to launch a crypto currency, Diem, originally dubbed Libra. Its assets were sold to Silvergate Capital.
