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Facebook owner Meta Platforms has seen its biggest stock market loss by almost $US 230 billion ($A321 billion), which came on the eve of Facebook’s 18th founding anniversary on Thursday.
Meta’s shares fell 26.4 per cent to $US237.76 ($A331.89 ) in after-hours trading, after investors became disappointed with the quarterly figures.
The company had posted sharply higher costs but gave a weak revenue forecast late Wednesday, spooking investors.
Facebook rebranded to Meta last year to mark the company’s shift to its futuristic “metaverse” project, which is sort of the internet brought to life, or at least rendered in 3D.
Meta CEO Mark Zuckerberg describes the metaverse as a “virtual environment” in which you can immerse yourself instead of just staring at a screen.
While the metaverse does not yet exist, and may not do for years, it would theoretically be a place where people can meet, work and play using virtual reality headsets, augmented reality glasses, smartphone apps or other devices.
Meta has already invested more than $US10 billion ($A14 billion) in its Reality Labs segment — which includes its virtual reality headsets and augmented reality technology — in 2021, contributing to the quarter’s profit decline.
The company also expanded its workforce by 23 per cent, ending the year with 71,970 employees, mostly in technical roles.
As it maintain its costly metaverse initiatives, Meta said that revenue in the current quarter is likely to come in below market expectations due in part to rival platforms, including TikTok and Youtube, that are vying for people’s attention.
Meta currently relies on advertising revenue for nearly all its income.
People’s changing online behaviour is also limiting Meta’s money-making abilities. More people are watching video, such as Instagram’s Reels (a TikTok clone), and this makes less money than more established features.
The Menlo Park, California-based company said it earned $US10.29 billion ($A14.45 billion), or $US3.67 ($A5.15) per share, in the final three months of 2021. That’s down 8 per cent from $US11.22 billion ($A15.76 billion), or $US3.88 ($A5.45) per share, in the same period a year earlier. Revenue rose to 20 per cent to $US33.67 billion ($A47.29 billion).
Analysts, on average, were expecting earnings of $US3.85 ($A5.41) per share on revenue of $US33.36 billion ($A46.86 billion), according to a poll by FactSet.
Since its rebrand last autumn, Meta Platforms Inc. has been shifting resources and hiring engineers — including from competitors like Apple and Google — who can help realise Zuckerberg’s “metaverse” vision.
Zuckerberg is betting that the metaverse will be the next generation of the internet because he thinks it’s going to be a big part of the digital economy.
Rather than a social media company, he expects people to start seeing Meta as a “metaverse company” in the coming years.
For now, though, the metaverse exists only as an amorphous idea envisioned — and named — by the science fiction author Neal Stephenson three decades ago. It’s not yet clear if it’ll be the next iteration of human-computer interaction the way Zuckerberg sees it, or just another playground for techies and gamers.
This could be spooking investors, who tend to prefer immediate, or at least quick, results on investments.
Meta said it expects revenue between $US27 billion ($A38 billion) and $US29 billion ($A41 billion) for the current quarter, below the $US30.2 billion ($A42.4 billion) analysts are forecasting.
with news from AAP
Zoe is a content creator, specialising in speech and corporate communications. She is currently the content producer of Supply Chain Channel— a learning ecosystem dedicated to connecting and empowering the Australian supply chain community.
