(Alliance News) - Meta Platforms Inc faces a fight to retain users after the social media giant on Thursday suffered its worst one-day crash in its ten-year history as a public company.
The company formerly known as Facebook saw around USD200 million after it posted disappointing results in the fourth quarter of 2021, exacerbated by a poor growth outlook late Wednesday. Its market value at the previous close stood at around USD900 billion.
The stock was down 25% at USD240.78 in New York on Thursday.
Meta reported net income of USD39.37 billion in 2021, up 35% from USD29.15 billion a year prior. This came off revenue of USD117.93 billion, up 37% from USD85.97 billion.
Diluted earnings per share for the year rose 36% to USD13.77 from USD10.09.
The Mark Zuckerberg-led firm also said daily active user numbers at Facebook - a key growth target for investors - fell to 1.929 billion in the three months to December, from 1.93 billion in the previous quarter.
Meta revealed it had spent USD10 billion on its interconnected virtual world - dubbed the "metaverse" - and warned it faced "headwinds from both increased competition for people's time and a shift of engagement".
The platform has struggled with user engagement in the face of rising competition from ByteDance's video-sharing app TikTok - popular among Gen Z consumers.
Looking at the fourth quarter of 2021, net income slipped 8.6% to USD10.26 billion from USD11.22 billion a year before. This came on the back of a 38% increase in costs & expenses of USD21.09 billion from USD15.30 billion. Diluted EPS for the quarter retreated 5.4% to USD3.67 from USD3.88.
Looking ahead, Meta expects first quarter 2022 revenue to fall in the range of USD27 billion to USD29 billion. This would be up between 3% and 11% year-on-year.
The Menlo Park, California-based firm sees year-on-year growth in the first quarter to be hurt by headwinds to both impression and price growth.
Facebook said on Wednesday that Apple Inc's App Tracking Transparency feature would decrease the company's 2022 sales by about USD10 billion.
The privacy change reduces targeting capabilities by limiting advertisers from accessing an iPhone user identifier.
"A a near-USD1 trillion price tag for the company leaves little room for disappointment, especially as that figure represents more than 20 times forecast profits for this year. That lofty valuation could look even more exposed if these fourth-quarter numbers suggest that demand for Facebook may be reaching saturation point," AJ Bell's investment director Russ Mould said.
"The company may therefore look to increase average revenue per user (ARPU) and it is doing a good job here. In the fourth quarter ARPU rose 14% year-on-year to USD11.57 but if advertisers see any shrinkage in the platform's user base that could prove hard to sustain, especially as the change to privacy settings to Apple's iOS platform make it harder for digital advertisers to harvest customer data and target them effectively," Mould added.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.