The Influencing Factors For A
Successful meta platforms Trade…..
Earnings Report Disappointment.....
disappointing element of the Q4 release: for the first time, Facebook’s user
base has stopped growing. It even shrank in some markets.
the Menlo Park, California-based Facebook, daily users fell to 1.929 billion in
the fourth quarter from 1.93 billion. The news, combined with a forecast for
lower than expected revenue growth in the current quarter, sapped investors’
confidence and sent the stock tumbling.
said it expected revenue growth to slow because users were spending less time
on its more lucrative services. It also blamed surging inflation which is
crimping advertiser spending. With these headwinds, the company is unable to
neutralize the impact of changes in Apple (NASDAQ:AAPL) privacy settings which
give users the choice of stopping apps from tracking their internet activities,
denting profitability for companies that sell targeted advertising, one of
Meta's biggest revenue sources. These changes could cost Meta some $10 billion
In Q4 2021,
Facebook parent company Meta Platforms met revenue expectations but missed EPS
projections in its Q4 earnings last Wednesday. The social giant’s quarterly
revenue came in at $33.67 billion, meeting analyst expectations of $33.41
billion. The company, which rebranded as Meta Platforms last October, reported revenue
of $29 billion last quarter, which was on par with analyst expectations last
year. After seeing a pandemic boost in online activity throughout 2020, its
revenue and earnings growth is beginning to slow down.
on its flagship platform Facebook this quarter was stagnant at 2.91 million
monthly active users, compared to 2.9 million users reported last quarter —
representing only an increase of 4% year-over-year. The platform’s daily active
users declined from the previous quarter for the first time, dropping from 1.930
billion to 1.929 billion globally.
recent earnings call, Zuckerberg acknowledged the impact on business due to the
“competitive marketplace” and named
TikTok as a major challenger. “People
have a lot of choices for how they want to spend their time,” he said,
which is why the company is focusing more on Instagram Reels, its short-form
video clone of TikTok. Zuckerberg also said regulation in Europe and Apple’s
privacy changes have impacted its personalized ads business.
regulators are working on a law that could potentially prohibit companies from
sending Europeans' data across the Atlantic to the U.S. Meta Platforms said
late last week that such a move could force the company to shut down Facebook
and Instagram in the region.
As new users
become a rare commodity in the post-pandemic environment, intensifying
competition is another headache for Chief Executive Officer Mark
Zuckerberg. He told investors in a conference call that the social
networking giant faced an “unprecedented level of competition,” with the rise
of TikTok, the rival viral-video platform.
hurdle that could hurt FB's future earnings— the company’s shift to
virtual-reality headsets, augmented-reality glasses and virtual worlds, known
as the metaverse, in which users can live and work. Meta Platforms plans to
invest heavily in this project whose success isn’t guaranteed. Meta’s Reality
Labs, which is giving a shape to this undertaking, lost $10.2 billion in
adjustment suggests that Facebook’s latest growth phase is over and investors
might have to wait for the stock to recover lost ground. Argus Research, while
downgrading Facebook to hold from buy, said in a note:
“The 4Q results were modestly
disappointing, though it was the company’s outlook that both upset the market
and led to our downgrade. Although controversy has often swirled around Meta,
the company faces a long list of problems in 2022, with increased competition
and pressure from Apple’s new advertising tracking policy being the most
on alert for rate rises in both the euro zone and the United States after the
ECB last week was considered to have adopted a more hawkish tone. The United
States reported stronger-than-expected jobs and earnings data.
Central Bank President Christine Lagarde on Monday calmed some of those
jitters, saying there were no signs that measurable monetary policy tightening
would be required.
"The market's inabilities to
rally on Friday’s strong payroll data, and generally poor stock reactions to Q4
results despite healthy earnings delivery, illustrate the overly bearish market
sentiment at the moment," JP Morgan analysts said in a market note.
company's rough turn of luck couldn't be happening at a worse time; as Facebook
looks to pivot the broader company toward the "metaverse," they also
shared that they spent nearly $10 billion on the effort -- and don't expect to
recoup that money any time soon. While Meta is managing to ship more and more
Quest headsets, there anecdotally hasn't seemed to be much interest in the
company's Horizon Worlds platform, and there are few shortcuts toward finding
an audience on an unproven hardware platform.
world is increasingly proving to be a tough place to do business. The point is,
this stuff is hard, and the people who have been building in public are hurting
even as they spend billions to develop the tech. There's no straightforward
road for Meta Platforms to follow; they have to blaze a trail where others are
actively failing and keep the rest of their company together while they do so.
spring, Apple launched changes to its iOS platform to limit how digital
advertisers tracked and targeted iPhone users. Users can opt out of being
tracked, making Meta's advertising platform less effective. The company began
to feel its impact in its 2021 Q3, but management revealed the full scope of
its effect in Q4.
Wehner revealed 2022 Q1 revenue guidance that called for growth of just 3% to
11% year over year, a potentially shockingly low guide considering the
company's revenue just grew 20% year over year in 2021 Q4.
management mentioned competition from apps like TikTok, Apple's iOS changes are
a big culprit for the low guidance. The changes weren't yet in place for the
first half of 2021, creating tough comparables for the first two quarters of
2022. Wehner estimated that iOS would cost Meta roughly $10 billion in ad
revenue this year.
spends a ton of money on research and development.
one of the original investors in Facebook, will step down as a director for the
social media giant's parent, Meta Platforms, the company announced after the
market close Monday.
been a director since 2005. He was one of the company's earliest investors and
is one of Silicon Valley's top venture-capital investors. Thiel will remain
director until Meta's 2022 annual shareholder meeting.
to his role in getting Facebook off the ground, Thiel is also a co-founder of
PayPal (PYPL) and Palantir Technologies (PLTR), a company that helps
governments track down terrorists.
a Wall Street Journal report, Thiel intends to focus his efforts on helping
Republican candidates supporting the agenda of former President Donald Trump in
the 2022 midterm elections, according to a person familiar with the matter.
It may take
a hot minute or two before investors consolidate their emotional hangover from
Meta's awful earnings day and begin to buy the dip in the tech giant's
"I think there are some dark
days ahead for Facebook. You can change your name every month if you want.
Their strategy is ultimately social media and digital advertising," said Wedbush tech analyst Dan Ives.
Adds Ives, "[Facebook CEO] Mark Zuckerberg has an
uphill battle to get back to growth."
Even Meta Platforms
bulls such as long-time tech analyst Mark Mahaney are cautious on the stock
price in the near-term.
"Shares are probably dead money
at this level of growth for at least the next three months," Mahaney said.