Meta Platforms shocked investors Wednesday with an unusually weak earnings report. Then Thursday, the company lost $250 billion in market cap. What in world is the Meta with Facebook?
Meta Platforms (ticker: FB), which includes Facebook, WhatsApp, Instagram, and Messenger, stunned financial markets with fourth-quarter results and weak guidance for the March quarter. The company said revenue growth could be as low as 3% in the period, compared to first quarter 2021 when Facebook’s revenue was up 48%. Meta projects first-quarter revenue growth between 3% and 11% from 2021 or $27 billion to $29 billion, is well below consensus estimates of $30 billion.
Meta said in its earnings release, it expects, “continued headwinds from both increased competition for people’s time and a shift of engagement within our apps towards video surfaces like Reels, which monetize at lower rates than Feed and Stories.” The company also noted “macroeconomic challenges like cost inflation and supply chain disruptions are impacting advertiser budgets.”
Wednesday’s news took down Snap (SNAP) 18% and Amazon (AMZN) 7% lower, but both companies rebounded Thursday on strong results of their own. So, what to make of the last two days in social media? Is this a Meta problem or a broader social media issue?
It seems to me as more progress is made in all things Web3, more players will enter the market and fight for market share. More competition entering the market makes this a Meta problem, but with $16 billion in cash on its balance sheet, Meta is well positioned to defend its position.