Big Tech is falling apart.
Facebook’s stock tanked 20% in premarket trading.
— John Solomon (@jsolomonReports) February 3, 2022
Shares in Meta (formerly Facebook) plummeted 20% in premarket trading Thursday following the Big Tech company’s announcement of suboptimal earnings numbers.
The company is pinning its worse-than-expected numbers on changes made to Apple’s privacy rules and increased competition in the field. Meta reported a decline in daily active users as such platforms as TikTok, owned by China’s ByteDance, pose increasing competition in the social media world.
This comes after a disastrous earnings report.
The company, which was recently renamed Meta, issued disappointing guidance for the first quarter in addition to coming up short on its fourth-quarter profit and user numbers. Daily Active Users (DAUs) on Facebook were slightly down in the fourth quarter compared to the previous quarter, marking its first quarterly decline in DAUs on record.
Facebook said revenue in the first quarter will be $27 billion to $29 billion, while analysts were expecting sales of $30.15 billion, according to Refinitiv. That would mean 3% to 11% year-over-year growth.
Facebook said it’s being hit by a combination of factors, including privacy changes to Apple’s iOS and macroeconomic challenges. It blamed the lower-than-expected growth in part on inflation and supply chain issues that are impacting advertisers’ budgets.
There’s also a shift to products that don’t generate as much revenue as its core news feed. For example, people are spending more time on its Reels videos.
“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 monetize at lower rates than Feed and Stories,” Facebook said.
The Palmieri Report is a Pro-America News Outlet founded by Jacob Palmieri. The Palmieri Report is dedicated to giving people the truth so that they can form their own informed political opinions.
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