Grab some tissues: Meta's share price tanks after Facebook emits latest figures
Blame it on the metaverse, Apple, TikTok, inflation, and higher data charges in India
After revealing it had blown $10bn on the metaverse this year, amid standstill Facebook growth, Meta's stock was hammered after the market close – with the price slumping from around $323 to $249.
The US goliath on Wednesday reported its Q4 and full year 2021 results, revealing it banked revenues of $33.7bn for Q4 and $118bn for the full year – respective year-on-year rises of 20 per cent and 37 per cent. Net income for the quarter was $10.3bn, a dip from Q4 2020's $11.2bn. For the full year, profit climbed 35 per cent to $39.3bn.
Meta measures Facebook's engagement in four ways: daily and monthly active users, plus family daily and monthly active people.
The daily active users stat fell for the first time ever – albeit by a small margin – from 1.93 billion to 1.929 billion. But to discover the dip, you need to delve into Facebook's slide presentation – the press release rounded the figure up to 1.93 billion.
Monthly active user numbers held steady, while the family metrics each grew by just ten million people.
Company execs warned of "headwinds" such as competition for users' time (the rise of TikTok got a mention) and various factors that will slow traffic growth – and therefore the number of ads Facebook can serve and the price advertisers are prepared to pay for ads.
Apple's changes to iOS privacy also hurt – and potentially to the tune of $10bn in lost ad sales this coming year – and Meta execs once again used the argument that making it harder to advertise on Facebook harms small businesses.
Meta also warned in an SEC filing [PDF] that it may be unable to offer Facebook, Instagram, and other services in Europe if it is unable to store European netizens' data on US-based servers due to the Privacy Shield arrangement between the EU and America being struck down. A replacement framework is nearing completion.
Increased data charges for Indian users were another factor, and made it harder to recruit the younger users Facebook and Meta have said they covet.
One of the products designed to lure those youngsters, the "Reels" short video service introduced to counter TikTok, has grown well — but execs warned it "monetizes at a lower rate" than other products.
Advertisers are also telling Facebook that their budgets aren't huge: between inflation and supply chain challenges, they're probably going to spend less.
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The balance sheet wasn't helped by big spending on metaverse-related matters that saw Meta's Reality Labs unit lose $3.3bn for the quarter and $10.2bn for the year, on revenue of $877m and $2.3bn respectively.
But there was some good news for Meta's VR business, with sales of virtual goods on the Oculus Quest content store passing the billion-dollar mark.
CEO Mark Zuckerberg also said that R&D conducted by the Reality Labs team will soon bear fruit.
"We are working towards a release of a high-end virtual reality headset later this year. And we continue to make progress developing Project Nazare, which is our first fully augmented reality glasses," he said.
The news wasn't all grim. Meta also revealed average revenue per user grew from Q3's $10 to $11.57 in Q4, beating market expectations. Earnings per share also grew, but not as much as expected. That's one reason for the dramatic share price plunge, but it needs to be put in perspective: Facebook/Meta's shares traded at around $250 in mid-2020 and grew rapidly to settle around $325.
On Meta's earnings call, Zuckerberg also mentioned Facebook's substantial investment in improved privacy. The company's many scandals in that field never delivered a share market reaction to match today's. ®