Meta Shares Slide On Bleak Q3 Report; Facebook Daily User Base Inches Up 3% But Earnings Fail To Clear Wall Street Bar

c-title pmc-u-font-size-20 pmc-u-font-size-38@tablet pmc-u-font-size-46@desktop-xl u-text-align-center@mobile-max u-letter-spacing-0025 pmc-u-line-height-normal u-line-height-45@tablet pmc-u-padding-t-1 pmc-u-padding-t-050@mobile-max”>Meta Shares Slide On Bleak Q3 Report; Facebook Daily User Base Inches Up 3% But Earnings Fail To Clear Wall Street Bar

By Dade Hayes

Dade Hayes

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October 26, 2022 1:22pm

Meta revenue for the third quarter fell short of Wall Street estimates
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Meta Platforms shares lost ground in after-hours trading Wednesday as investors reacted to a mixed third-quarter earnings report.

The tech giant formerly known as Facebook delivered slightly better-than-expected revenue of $27.7 billion, but it slipped 4% from the year-ago quarter, reflecting a broad pullback by digital advertisers. Wall Street analysts had expected $27.4 billion in revenue.

Earnings per share of $1.64 fell well short of the consensus forecast for $1.90. Facebook delivered something of a bright spot, posting a 3% uptick in daily active users, reaching 1.98 billion in September.

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Meta shares tumbled 15% on the numbers after closing the regular session at $129.82, down almost 6%. The stock has dropped more than 60% in 2022 to date, one of the worst performances among a battered set of tech peers whipsawed by worsening economic conditions, fluctuating foreign currency exchange rates and other factors. Meta has specifically cited changes implemented by Apple as a drag on its business, something not experienced by all tech players.

The expensive pivot away from its legacy social media platforms Facebook, Instagram and WhatsApp and into the universe has drawn increasing scrutiny among investors. Founder and CEO Mark Zuckerberg is expected to address those concerns and detail the company’s efforts in pulling off the transition during a conference call with analysts.

In its earnings release, Meta said it expects fourth-quarter revenue in the range of $30 billion to $32.5 billion, which is below the current consensus among analysts.

“We are making significant changes across the board to operate more efficiently,” the company said in the release. “We are holding some teams flat in terms of headcount, shrinking others and investing headcount growth only in our highest priorities.” Overall head count is due to stay flat in the fourth quarter compared with third-quarter levels.

Operating losses at Reality Labs, the company’s division dedicated to metaverse exploration, will “grow significantly” in 2023 compared with this year, the release warned. Nevertheless, it added, “we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.” Division revenue in the third quarter sagged to $285 million from $452 million in the previous quarter, below analysts’ forecast for $406 million.

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