For the First Time Ever Meta (Facebook) Shares Plunge 20% as It Loses Millions of Users

In a surprising turn of events, the social-media giant Meta on Wednesday posted its Q4 results of the fiscal year 2021 after which the company’s shares plunged more than 20% during after-hours trading. The drop in stock prices shows that investors do not seem convinced by Facebook’s plans to dive into the metaverse.

After Netflix’s disappointing results, Meta’s $10.3 billion quarterly profit and daily user growth didn’t quite fulfill the expectations, with 1.93 billion daily active users compared to the expected 1.95 billion (according to Street Account via CNBC), and 2.91 billion monthly active users compared to the expected 2.95 billion.

The company’s quarterly revenue grew to $33.7 billion from $28.1 billion, with advertising revenue rising to $32.6 billion from $27.2 billion YoY, while its Q4 net income came down to $10.3 billion, an 8 percent decrease from the previous year’s $11.2 billion, the company posted $39.4 billion net income for the whole year, which went up 35 percent when compared to $29.1 billion in 2020.

Meta-owned platforms, including, Facebook, Instagram, WhatsApp, and Messenger, all stood at $32.79 billion in terms of revenue with an operating income of $15.89 billion. Meanwhile, its Reality Labs Division which includes VR/AR applications generated a revenue of $877 million but lost $3.3 billion in the fourth quarter of last year.

Metaverse Not Looking So Hot

The reported numbers suggest that Meta’s Reality Labs division is quite literally bleeding cash and this is not the first time it has done so. Meta, which is betting hard on the futuristic “metaverse” still managed to lose $10.6 billion overall in that division despite more than doubling the revenue compared to 2020.

What’s worse is that since the division has been reporting its revenue and losses separately, it has always operated in the red: Reality Labs posted a $4.5 billion loss in 2019, a $6.6 billion loss in 2020, and now, what is being reported as the biggest number till date, a loss of $10.6 billion in 2021.

However, the drop in shares is just the latest in bad news for the tech company. Last month, the Facebook-backed Diem Association formerly known as Libra, which was meant to be a global digital currency, sold its assets to Silvergate bank for $200 million, putting an end to the social media giant’s stablecoin ambitions.

Launched back in June 2019, the group had reportedly hoped to launch its stablecoin digital currency last January but due to repeated roadblocks from lawmakers and regulators from around the world, the project was delayed and scaled back multiple times until last month, when it was finally shut down. The report further states,

On the impressions side, we expect continued headwinds from both increased competition for people’s time and a shift of engagement. Macroeconomic challenges like cost inflation and supply chain issues are impacting advertisers’ budgets.

However, for the current fiscal year, the company seems rather ambitious. Meta expects total revenue of the first quarter in 2022 to lie somewhere between $27 billion to $29 billion, expecting a 3 percent to 11 percent year-over-year growth.



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