Woeful Earnings Report Tanks Facebook

MENLO PARK, CA — Facebook’s parent company issued disappointing earnings guidance Wednesday, and it triggered a frantic sell-off.

Shares in the social media behemoth tumbled in after-hours trading Wednesday, and the bloodbath only worsened when the opening bell rang Thursday.

Meta was on pace for its worst single-day drop, having already lost more than a quarter of its value, CNBC reports.

The company’s stock price fell below 25 percent Thursday morning.

The Menlo Park company missed key fourth quarter earnings estimates, reporting earnings of $3.67 that fell 17 cents short of Wall Street’s expectations, although the company’s $33.67 in revenues topped the $33.4 estimated.

But the company’s first-quarter revenue forecast of $27 to $29 billion fell short of analyst expectations of $30.15 billion, according to a CNBC report citing Refinitiv.

Additionally, the company said changes to Apple’s privacy policy will cost Facebook $10 billion this year, CNBC reports.

“We believe the impact of iOS overall is a headwind on our business in 2022,” Meta CFO Dave Wehner said on a call with analysts after the company’s fourth-quarter earnings report.

“It’s on the order of $10 billion, so it’s a pretty significant headwind for our business.”

And beyond the numbers, there are concerns about competition from other social media sites such as TikTok, a stagnant user base, and CEO Mark Zuckerberg’s big, risky bet on virtual reality sphere with no clear roadmap for when the initiative would become profitable, according to analysis from CNN.

Meta’s plunge appears to have had broader implications for Wall Street. All three major indices in the red as of Thursday morning. The tech-rich Nasdaq shed more than 300 points (around 2.25 percent). The Dow and S &P 500 were down too.

JP Morgan analysts downgraded Meta from overweight to neutral, and lowered its price target from $385 to $284, CNBC reports.

Analysts said Facebook “is seeing a significant slowdown in advertising growth while embarking on an expensive, uncertain, multi-year transition to the Metaverse.”