Shares of Facebook’s parent company Meta dropped by more than 20 per cent to $246.53, from $323.00, in after-hours trading on Wednesday after the social networking platform reported weaker-than-expected earnings and data showed it had lost daily users for the first time in its 18-year history.
The California-based company’s net profit dropped more than 8 per cent a year in the fourth quarter to $10.2 billion but was about 11 per cent up on quarterly basis.
Revenue for the three months through to December 31 grew 20 per cent to more than $33.6bn, marginally exceeding analyst estimates of $33.4bn.
The company’s net profit for the 2021 financial year jumped by about 35 per cent to more than $39.4bn while sales rose 37 per cent to $117.9bn.
Facebook's daily active users missed analyst estimates, coming in at 1.929 billion in the three months to the end of December, compared to 1.84 billion in the same period a year earlier. They fell from 1.93 billion in the previous quarter.
Facebook's monthly active users were flat at 2.91 billion in the last three months of 2021, compared with the previous quarter, but slightly above the 2.8 billion monthly active users in the same quarter of 2020.
“We had a solid quarter as people turned to our products to stay connected and businesses continued to use our services to grow,” Meta founder and chief executive Mark Zuckerberg said.
“I am encouraged by the progress we made this past year in a number of important growth areas like reels, commerce and virtual reality … we will continue investing in these and other key priorities in 2022 as we work towards building the metaverse,” Mr Zuckerberg said.
The company’s earnings per share dropped 5 per cent annually to $3.6, missing expectations of $3.8.
In the last quarter, advertisement impressions delivered across Facebook’s family of apps increased by 13 per cent a year and the average price per advertisement rose by 6 per cent annually.
For the full financial year, advertisement impressions surged by 10 per cent and the average price per advertisement increased by 24 per cent, the company said.
Meta’s family of apps includes Facebook, Instagram, Messenger, WhatsApp and other services.
The company's advertising sales contributed more than 96 per cent to overall sales in the fourth quarter, growing by about 20 per cent on an annual basis to more than $32.6bn in the September-December period.
Revenue from other streams — including reality labs — rose 16.6 per cent on an annual basis to more than $1bn.
The company’s reality labs include augmented and virtual reality-related consumer hardware, software and content.
Meta, which employs 71,970 people, expects its first quarter 2022 total sales to be in the range of $27bn to $29bn, which represents an annual growth of 3 per cent to 11 per cent, which is below analysts' expectations.
The company expects its year-on-year growth in the January-March period to be affected by “headwinds to both impression and price growth”.
On the impressions side, “we expect continued headwinds from both increased competition for people's time and a shift of engagement within our apps towards video surfaces like reels, which monetise at lower rates than feed and stories”, Meta’s chief financial officer David Wehner said.
“On the pricing side, Meta expects growth to be negatively impacted by various factors. First, we will lap a period in which Apple's iOS changes were not in effect and we anticipate modestly increasing ad targeting and measurement headwinds from platform and regulatory changes.
“Second, we will lap a period of strong demand in the prior year and we are hearing from advertisers that macroeconomic challenges like cost inflation and supply chain disruptions are impacting advertiser budgets.”
Apple’s update to its operating system is intended to make it harder for advertisers to track people as they rotate between different apps on their device.
Users are given the choice to opt in or out of app tracking. This will restrict how technology companies such as Facebook and Google gather data for advertising purposes.
The platform's capital expenditures, including principal payments on finance leases, were $5.5bn and $19.2bn for the fourth quarter and the full financial year, respectively.
They are expected to be in the range of $29bn to $34bn for the 2022 full financial year, driven by the company’s investments in data centres, servers, network infrastructure and new offices.
“This [capital expenditure] range reflects a significant increase in our artificial intelligence and machine learning investments, which will support a number of areas across our family of apps,” Mr Wehner said.
Meta said while its reality labs products may require more infrastructure capacity in the future, they do not require substantial capacity today and, as a result, are not a significant driver of 2022 capex.
The company repurchased $19.2bn and $44.8bn of its common stock in the fourth quarter and in the January-December period, respectively. As of December 31, it had $38.8bn available and authorised for the repurchases, Meta said.
Facebook’s cash, cash equivalents and marketable securities dropped 22 per cent to $48bn at the end of last year.