Facebook Stock Plunges 26 Percent After Second Quarter Earnings
Facebook recently announced its second quarter earnings. It matched analysts’ expectations, as it reported that monthly active users reached 2.9 billion. But despite the strong revenue growth, the company’s stock price plunged by nearly 26 percent. Why is that? We’ll look at some of the company’s recent developments and its stock price trajectory.
Monthly active users came in at 2.9 billion, matching analysts’ forecasts
The social media giant reported that it has gained an additional two billion monthly active users, matching analysts’ expectations. WhatsApp, an instant messaging service owned by Meta, reported that it has reached a milestone of delivering over 100 billion messages per day. The company also announced that it has surpassed two billion monthly active users, which puts it ahead of its competitors.
Monthly active users on Facebook came in at a record high of 2.27 billion in the third quarter of 2015. Facebook grew its user base in India by 4.2 percent, with time spent on the social media platform increasing by 7.6 percent. WhatsApp gained 16.6 percent in India. Its smartphone usage increased significantly as a percentage of total time on the Internet. Its mobile users now make up 55 percent of total time online.
Revenue growth rate is expected to continue in Q3
Facebook has been beating analysts’ expectations, and the company’s third-quarter results are expected to show similar growth. Facebook’s daily active users increased by 6% in Q3 to reach 1.93 billion. Its monthly active users grew by 11% to 2.91 billion. The number of family monthly users increased by 12% to 3.58 billion. Facebook continues to enjoy significant increases in user engagement, which should result in strong revenue growth.
Facebook’s overall user growth is slowing, but the company has still added millions of new users. It has also maintained its revenue growth rate, despite the recent controversy. The company also sold a significant amount of VR units and Ray Ban smartglasses, which helped to boost its revenue. As a result, analysts are predicting that the revenue growth rate for Facebook will remain steady.
Reality Labs is off to a slow start
The second quarter earnings report for Facebook has revealed that the division responsible for AR, VR, and the so-called “metaverse” lost $2.8 billion. That’s an underwhelming result for a division that has been the driving force behind the company’s metaverse goal.
Facebook’s parent company, Meta Platforms Inc., is refocusing on hardware, and that’s a key part of its strategy. The company’s chief technology officer, Andrew Bosworth, has told staff members that various projects will be postponed or dropped, and that the division will not layoff any of its employees.
Stock price plummets 26 percent
As Facebook stock plummets 26 percent, its parent company, Meta Platforms, reported disappointing fourth-quarter earnings, its market cap has plummeted to just $661 billion – a reduction of over $230 billion from its early Thursday morning value of $898.5 billion. Its profit outlook for the next three years was also revised downward, and the company also forecast revenue declines for the current quarter. This news has sent the stock price of Meta Platforms down even further.
Despite the massive loss, Facebook remains one of the world’s most valuable companies, with a net worth estimated at more than $US85 billion. The company also has a huge influence on market movements, and its stock price plunge took nearly $US29 billion from founder Mark Zuckerberg’s personal wealth. The plunge is the largest single-day dollar loss in the history of listed firms. It also took nearly 30 billion from the net worth of Zuckerberg, making it the second largest loss of an individual in one day after Tesla founder Elon Musk’s $US35 billion loss in November.
Sheryl Sandberg steps down after 14 years as COO
Facebook has announced that Sheryl Sandberg will step down as COO of the company. The decision comes amid growing threats from new social media applications, such as TikTok. In addition to the threat of new apps, Facebook has recently lost daily users. Its daily users decreased by half a million in the last three months of 2021. The news sent Facebook stock tumbling.
Sandberg is leaving Facebook to focus on foundation and philanthropic work, but will continue to serve on Meta’s board. Her direct reports will transition over the next few months. While at Facebook, Sandberg wrote the bestseller “Lean In” about the changing role of social media.
