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Why Meta Platforms Stock Is Down By 23% Today

By:
Vladimir Zernov
Published: Feb 3, 2022, 16:06 UTC

The stock made an attempt to settle below the $240 level.

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Meta Platform Stock Falls After Disappointing Q4 2021 Report

Shares of Meta Platforms found themselves under strong pressure after the company released its fourth-quarter results.

Meta Platforms reported revenue of $33.67 billion and earnings of $3.67 per share, beating analyst estimates on revenue and missing them on earnings.

Daily active users (DAUs)  totaled 1.93 billion and also missed analyst estimates. The report indicated that the growth in DAUs has stalled, which is not good for a high-growth tech stock.

While user growth stalled, expenses increased due to active investments in the Metaverse. It should be noted that Metaverse may take years to develop, and it remains to be seen whether the market will be happy to see higher expenses in case Meta Platforms fails to show solid growth in the upcoming quarters.

The guidance for Q1 2022 was also disappointing. The company expects to report total revenue of $27 billion – $29 billion, a 3% – 11% growth on a year-over-year basis. The company added: “[…] 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”.

Not surprisingly, the stock suffered a serious sell-off after Meta Platforms missed analyst estimates and talked about material headwinds.

What’s Next For Meta Platforms Stock?

The current analyst consensus estimate for Meta Platform’s earnings in 2022 is $14.18 per share. Analyst estimates have been moving lower in recent weeks, and they will surely take a major hit after the weak earnings report.

Currently, the stock is trading at 17 forward P/E which may look extremely cheap for a leading tech stock. However, declining earnings estimates and worries about increased competition for people’s time, as well as regulatory concerns, may continue to put pressure on Meta Platforms shares.

All in all, it remains to be seen whether speculative traders will rush to buy Meta Platforms shares after the big pullback. The recent trading action in PayPal stock shows that the market is merciless when major tech stocks miss expectations.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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