Poor Q3 Results & Worrisome Forecasts Make Facebook Parent Meta Bleed In Stock Market
Facebook¡¯s parent company Meta's CEO Mark Zuckerberg has asked investors for patience after the disappointing Q3 results were announced. ¡°I think we¡¯re going to resolve each of these things over different periods of time,¡± Zuckerberg said.
Facebook¡¯s parent company Meta witnessed an ugly day in stock market yesterday after it announced disappointing Q3 results and a worrisome forecast.
Meta reported a 4% drop in revenue for its third quarter (June-September 2022), down from $29 billion a year earlier to $27.7 billion in the recently ended quarter. Its net income has plummeted 52% to $4.4 billion vs a year earlier, while the company¡¯s total costs for the third quarter rose to $22.1 billion, compared with $18.6 billion the year prior.
reuters
Meta forecasted a weak holiday quarter (Oct-Dec 2022) and significantly more costs next year, sending shares down nearly 20% yesterday as investors voiced skepticism about the company¡¯s pricey metaverse bets, as per Reuters report.
Meta plans to consolidate offices and would keep headcount flat through the end of 2023. Another worrying point was that Meta also forecasted that its full-year 2023 total expenses would be $96 billion to $101 billion, significantly higher than a revised estimate for 2022 total expenses of $85 billion to $87 billion.
This worrisome forecast also knocked off about $67 billion from Meta¡¯s stock market value in extended trade, adding to the more than half a trillion dollars in value already lost this year. Meta share price is already down over 60% this year.
CEO Mark Zuckerberg Asks For Patience
reuters
After the disappointing results hurt Meta¡¯s shares as well as market valuation, Meta Platforms CEO Mark Zuckerberg has asked investors for patience with the social-media giant¡¯s swelling investments in unproven bets at an already-challenging time for digital-advertising companies, as per Bloomberg report.
¡°I think we¡¯re going to resolve each of these things over different periods of time,¡± Zuckerberg said. ¡°And I appreciate the patience and I think that those who are patient and invest with us will end up being rewarded.¡±
Also Read: Meta Raises $10 Billion In Its First Ever Bond Offering
What Analysts Say About Meta¡¯s Results & Forecast
American multinational financial services giant Morgan Stanley today downgraded Meta after its disappointing Q3 results, saying that the higher spending forecast will hurt the stock, as per CNBC report.
Analyst Debra Aho Williamson of US based market research firm Insider Intelligence reportedly said that Meta was on "shaky legs when it comes to the current state of its business".
"Mark Zuckerberg's decision to focus his company on the future promise of the metaverse took his attention away from the unfortunate realities of today: Meta is under incredible pressure".
"Meta has drifted into the land of excess ¡ª too many people, too many ideas, too little urgency. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes," investor Brad Gerstner, chief executive at American investment company Altimeter Capital, told the firm in an open letter this week, which called on the company to cut staff and scale back its investments in artificial intelligence and virtual reality, also known as the metaverse, as per BBC report.
How Social Media Reacted To Meta¡¯s Meltdown
Some Twitter users compared Meta's share collapse yesterday to crypto.
The irony of this tweet, is that this red candle is a result of meta's decision to dabble in crypto, and the metaverse. https://t.co/5LJa7Cxc92
¡ª Naka ? (@Nakameowdough) October 27, 2022
This isn¡¯t a cryptocurrency or pennystock.
¡ª unusual_whales (@unusual_whales) October 26, 2022
This is $META in after hours. pic.twitter.com/OCC8jRR2Fr
Another Twitter user expressed concern over Alphabet's results more than Meta's.
People are rightly staring at Meta¡¯s poor results but the more I think about it the more Alphabet¡¯s results are the real horror show.
¡ª Mark O'Neill (@marxculture) October 27, 2022
They are still completely reliant on adtech, they can¡¯t even break even on Cloud and they have no strategic pipeline.
Adding fun to tweets, one user tweeted how a Meta shareholder might be feeling after yesterday's poor results.
? #Meta investors after the earnings report pic.twitter.com/CXFVd4U8dB
¡ª Investro.com (@investrocom) October 27, 2022
Also Read: Facebook Parent Meta Has Reportedly Begun Layoffs
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