By Dhirendra Tripathi
Investing.com – Stock of Facebook-owner Meta Platforms (NASDAQ:FB) plunged 20% in premarket trading Thursday as December quarter dealt a rude jolt to it – a first-ever decline in global daily active users in its history.
DAUs declined from the September quarter to 1.929 billion in October-December. Earnings also fell below expectations as costs surged, due largely to heavy investment in virtual and augmented reality technologies that CEO Mark Zuckerberg has said are the company's future. Capital expenditure of $29 billion-34 billion is planned for data centers and network infrastructure this year.
Facebook and social media rivals like TikTok and YouTube (NASDAQ:GOOGL) have enjoyed a scorching run over the last two years, as at-home users logged in for hours at a stretch to engage with families, watch content and shop online during the pandemic. Fourth-quarter revenue rose 20% to near $34 billion thanks to user growth, more clicks on its ads and higher prices for them.
However, that unprecedented growth is now suffering from user fatigue and increasing headwinds in the form of tighter oversight.
Meta is also finding it harder to sell targeted advertisements due to privacy changes implemented last year by Apple (NASDAQ:AAPL). Apple's new policy, which has also troubled several other apps that rely on tracking users to help sell ads, will cost Meta $10 billion in revenue this year, Zuckerberg told an analyst call.
The company is now forecasting its current-quarter revenue to be $28 billion at the midpoint of its guidance range, up a relatively modest 7% on the year. The company also expects inflation and supply chain disruptions to hurt advertiser budgets.
The company has attempted to go beyond its money-spinner Facebook but achieved mixed success. Last year, it had to pause work on Instagram Kids due to a public outcry over its impact on the young. Zuckerberg said Meta’s rival to TikTok, Reels, is growing quickly, but monetization has been slow.