Facebook owner Meta Platforms misses Wall Street, forecasts weaker forecast

Facebook owner Meta Platforms misses Wall Street, forecasts weaker forecast

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

February 2, Reuters -- Facebook owner Meta Platforms Inc FB.O shares plunged 20% late on Wednesday as the social media company missed Wall Street earnings estimates and posted a weaker than expected forecast.

Meta said it was hit by Apple Inc's AAPL.O privacy changes to its operating system, which has made it harder for brands to target and measure ads on Facebook and Instagram, and macroeconomic issues like supply-chain disruptions. The after-hours slump in Meta shares vaporized $200 billion worth of its market value, with another $15 billion in value lost by peers Twitter Inc TWTR.N Snap Inc SNAP.N and Pinterest Inc PINS.N Shares of Alphabet Inc GOOGL.O, which posted record quarterly sales that exceeded expectations on Tuesday, were down 1.3%. Meta, which has the second largest digital ads platform in the world after Google, warned its advertising business was facing significant uncertainty in the fourth quarter. The company forecast first quarter revenue in the range of $27 billion to 29 billion. According to IBES data from Refinitiv, analysts were expecting to see $30.15 billion.

Apple has changed its operating software to allow users to see their activity online, making it harder for advertisers to rely on data to develop new products and know their market.

The company's total revenue rose to $33.67bn in the fourth quarter from $28.07bn a year ago, beating analysts' estimates of $33.40bn, according to IBES data from Refinitiv.

The company's augmented and virtual reality business, Meta's Reality Labs, was losing $10.2 billion for the full year 2021, compared to a $6.6 billion loss the previous year. It was the first time that the company had broken out of this segment in its results.

Mark Zuckerberg, the company's CEO, previously warned that the company's investment in this area would reduce operating profit by $10 billion and would not be profitable in the near future. On Wednesday, the company said it would change its stock ticker to META this year, the latest step in its rebrand to focus on the metaverse, a futuristic idea of virtual environments where users can work, socialize and play.

The tech giant, which changed its name to reflect its metaverse aims in October, is betting that the metaverse will be the successor to the mobile internet. It didn't comment 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 rebrand comes at a time of increasing scrutiny from lawmakers and regulators over allegations of anticompetitive conduct and the impacts of how it handles harmful or misleading content across its Facebook and Instagram platforms. ABI Research analyst Eric Abbruzzese said that if you put billions up front and not really expect return for years, shareholders are going to be hesitant.