Meta stocks have dropped by more than 50% to two years in the midst of concerns that the sun has set on the parent company Facebook, which rules social media - for both users and advertisers alike.
Why Elon Musk Just Bought Twitter
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On Monday, Elon Musk bought Twitter for $ 44 billion. Musk, C.E.O. of Tesla, the world's richest man, plans to take over a private communications company, and says he wants Twitter to be more...
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Tesla stock fell 11% on Tuesday as investors scrambled with Elon Musk for Twitter acquisition and increased EV competition. Musk uses most of his Tesla stake as collateral to finance the $ 44 billion acquisition on social media. Meanwhile, Ford said it was facing a strong demand for its F-150 and that it plans to produce 150,000 units by 2023. Tesla&#...
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Twitter has announced that it welcomes Elon Musk's $ 44 billion promise to buy on Monday. Jeff Bezos took to Twitter to ask if Tesla's business dealings in China would empower the company. Twitter has been banned in China since June 2009 as part of the country's "Great Firewa...
Later on Wednesday, we will get a clear idea that fear is rampant and that the sale of Meta stocks has gone up as the renamed Meta Platforms (FB) sends Q1 revenue after the closure.
Meta Profit Update
On Feb. 2, Meta released a first-quarter earnings guideline of $ 27- $ 29 billion, equivalent to a 3% -11% growth compared to the previous year. With analysts expecting $ 30.2 billion in Q1 sales, that warning led to a massive sale that has cost Meta nearly $ 500 billion in market value.
Since then, analysts have reduced Q1 EPS estimates to $ 2.56, down 22% from the previous year, and sales increased by 8% to $ 28.2 billion.
One of those weaknesses reflects Apple's privacy change, which has hindered advertisers' return to spending money on ads. That means they are not willing to spend that much money on each ad on Facebook. Big economy problems can also reduce the use of advertising, high interest rates and the lack of resources for both of these negative aspects. Meanwhile, Russia's invasion of Ukraine disrupted those economies and caused rising electricity prices, particularly in Europe.
Essentials are expected to be significantly affected as higher Meta costs include declining sales.
In Q4, part of Meta's Reality Labs, which focuses on augmented metaverse- and real-time headsets and software, lost $ 3.3 billion a quarter of $ 877 billion in revenue.
Meta's Family of Apps - which includes Facebook, Instagram, WhatsApp and more - has an operating revenue of $ 15.9 billion out of a revenue of $ 32.8 billion.
In addition to those key bottom and top lines, Wall Street will focus on the styles of Facebook users. The fear that Facebook’s first entry for global users in Q4 is a sign of the worst to come.
The problem for TikTok Facebook
Despite Apple's privacy changes that have made online ads less effective, the announcement of Meta's Q4 revenue raises additional concerns that could weigh heavily on growth. Bigger: "We believe competing services have a negative impact on growth, especially for younger viewers," CFO Dave Wehner said in a statement on Wednesday's Q4 salary. TikTok is the only named competitor by name.
Trying to combat the TikTok threat and elevate its game with young adults has created another storm in the power of Meta hall. Meta is now focused on driving user engagement through its Reels short form video feature, however "there are few ads on Reels today," Wehner said in Feb. 2.
Although Meta expects Reels to prove the fertile ground for making money, that will take time. At that point, Reels growth will be heavier on overall results, as Meta algorithms will prefer shorter videos, which means smaller growth in more heavy News feeds and news formats.
In February, Meta announced the release of two explicit Reels ad formats so as not to disrupt video content. Meta offers revenue sharing for Reels creators to place ads. Morgan Stanley statistician creator Brian Nowak will receive 55% of the advertising revenue they place.
On April 26, the Google Parent Alphabet (GOOGL) was overtaken by Q1 results as TikTok had a major impact on YouTube's revenue. In early April, Snapchat parent Snap (SNAP) also missed a view.
Apple Costs Meta $ 10 Billion
Facebook has been warning since late 2020 about the challenge posed by Apple's privacy reform. But the change that began with the iOS 14.5 update last spring had little effect until Q4. Apple now needs apps downloaded through the App Store to allow users to log in or out to track their activity across all third-party sites. With a large number of outgoing users, businesses are less likely to target advertising to potential customers who may be interested in their products or services.
"We believe the overall impact of iOS as a whirlwind on our business in 2022 is $ 10 billion," Wehner said on February 2.
The weight of annual growth is likely to be felt in the first half of 2022, as the impact of iOS transformation was not really felt until the second half of 2021.
Meta works with changes to make its ad targeting more effective, despite the impact of changes related to privacy. Using artificial intelligence to predict consumer interest rather than tracking users' activity is not a quick solution. However, analysts will be eager to hear that Meta provides a timeline for development.
Meta Stock: Is It Buying?
Meta Managers have compared their current Reels monetization modification with previous successful content changes, such as switching to News. But this time is different. User growth is limited in the midst of growing competition. At the same time, Meta spends a lot of money to stop metaverse power that may not be achieved for years. All of that makes it hard to have faith in the power of Facebook rebound.
