The news: Meta’s weak earnings report sent its stock tumbling as much as 23% in after-hours trading.
Behind the numbers: Facebook’s daily active users were lower than market expectations, dropping by approximately 1 million in Q4 2021 versus the previous quarter. Monthly active users (MAU) were 2.91 billion; the consensus market expectation was 2.95 billion, per StreetAccount. It was the slowest quarterly growth rate for MAU in at least three years.
Reeling: Meta CEO Mark Zuckerberg said he was encouraged by the company’s progress in “important growth areas like Reels, commerce, and virtual reality.”
Wehner also noted increased competition for consumers’ time as a headwind the company will face in the future.
Analyst take: “It’s clear that there are many big roadblocks ahead as Meta faces tough new competition for ad revenue such as TikTok, and as it contends with ongoing ad targeting and measurement challenges from Apple’s iOS changes,” says Insider Intelligence principal analyst Debra Aho Williamson. “While we expect Meta to ramp up testing ads and commerce within its metaverse offerings this year, those efforts will be highly experimental and not likely to drive much revenue in the near term.”
The big takeaway: Anyone expecting a total lack of turbulence from Meta in 2022 should prepare to be disappointed.