File – Facebook employees will take a photo on October 28, 2021 outside the headquarters in Menlo Park, California, with the company’s new name and logo. Meta, the company that owns Facebook, Instagram, and WhatsApp, plummeted inventories during non-business hours. After reporting on Wednesday, February 2, 2022, that fourth-quarter profits rarely declined due to a sharp increase in costs. (AP Photo / Tony Avelar, file)
Meta, which owns Facebook, Instagram and WhatsApp, plunged during non-business hours on Wednesday after an unexpectedly large amount of spending on the “Metaverse” project led to a rare decline in profits in the fourth quarter.
Meta shares fell 22.6% in after-hours trading to $ 249.90. If the market continues to fall until the market opens on Thursday, the company’s market capitalization (overall value) is expected to fall by nearly $ 200 billion.
The company, based in Menlo Park, California, said it generated $ 10.29 billion, or $ 3.67 per share, in the last three months of 2021. That’s down 8% from $ 11.22 billion in the year-ago quarter, or $ 3.88 per share. Revenue increased 20% to $ 33.67 billion.
On average, analysts expected $ 33.36 billion in revenue and $ 3.85 per share, according to a FactSet poll.
Meta made a significant investment in the Reality Labs segment, including virtual reality headsets and augmented reality technology, during the quarter, accounting for most of the decline in profits. The company also forecasts lower earnings than analysts expected this quarter.
Formerly Facebook, Meta Platforms Inc. gave it a new name last fall and showed its ambition to become what CEO Mark Zuckerberg calls a “metaverse company.” Since then, the company has shifted resources and hired engineers who can help realize his vision, including competitors such as Apple and Google.
The Metaverse is a type of Internet that is rendered in at least 3D. Zuckerberg describes it as a “virtual environment” that you can enter, rather than just display it on the screen. Theoretically, the Metaverse is a place where people can meet, work and play using virtual reality headsets, augmented reality glasses, smartphone apps, or other devices.
Zuckerberg believes that the Metaverse will be a big part of the digital economy, so we are confident that the Metaverse will be the next generation of the Internet. He hopes people will start to see Meta as a “Metaverse company” in the coming years, not as a social media company.
But for now, the Metaverse exists only as an amorphous idea dubbed by science fiction novelists. It’s not yet clear whether it will be the next iteration of human-computer interaction from Zuckerberg’s point of view, or just a playground for engineers and gamers.
This can surprise investors who tend to prefer immediate, or at least rapid, outcomes of their investment.
Debra Aho Williamson, an analyst at Insider Intelligence, said:
“Meta expects to step up advertising and commerce testing within Metaverse products this year, but these efforts are highly experimental and unlikely to generate a lot of revenue in the short term. Let’s do it, “she added.
Facebook’s parent Meta share plummeted 22% due to lower profits | WGN Radio 720
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