Meta Platforms (Facebook): Share price falls by more than 20%!


Meta Platforms (Facebook): Share price falls by more than 20%!


Just before stock markets closed in the US, Facebook's share price fell sharply (-23%). The reason? Particularly disappointing results and a first since the creation of the social network: the drop in the number of users.

A drop in net income, a decrease in the number of users, and unambitious forecasts in the eyes of investors - this is the cocktail of the drop in the Facebook share price. The share price fell from $323 to $249 after the close of the New York Stock Exchange.


Disappointing results and forecasts

If the group's turnover for the fourth quarter of 2021 was more or less in line with forecasts (33.7 billion dollars), the net profit may have made people cringe. At $10.3 billion, it was down 8% from Q4 2020. In addition to the results, the forecasts obviously did not reassure investors. For the current quarter, Meta Platforms now expects sales of between 27 and 29 billion dollars, whereas analysts were expecting sales of over 30 billion.

But the market has also sanctioned the drop in the number of users. It is the firm's first decline since the creation of the social network 18 years ago. Over the last 3 months of 2021, the American company deplores a drop of about 1 million user accounts. This drop is particularly visible in two areas: Latin America and Africa, with these two geographical areas seeing a drop of around 3 million users over the quarter.

Although the number of users had not increased in Europe or North America for several quarters, this stagnation had until now been offset by increases in other geographical areas. However, this proved not to be the case in the final quarter of the year 2021. A decline that should nevertheless be put into perspective, as the group can still boast the astronomical figure of 1.929 billion daily active accounts. It is therefore the combination of all these elements that saw Facebook's share price fall after the market close: - 23%.

 

Metaverse Costs a Lot of Money!

Last October, at the time of the announcement of the company's name change, Mark Zuckerberg announced investments in the metaverse sector to the tune of 10 billion dollars. At the heart of this strategic refocusing is the Facebook Reality Labs entity. A sub-division of the group that posted losses of 3 billion dollars in the fourth quarter of 2021 and more than 10 billion over the whole of 2021. But for now, it's about investment rather than dry losses.

Many observers note that the monetization of the metaverse could take the Meta group several years. This could be quite a long shot given that it is the group's main income source. But Meta Platforms seems to have taken a long-term gamble. A gamble that could pay off if the metaverse develops according to current speculation and expectations.


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Meta Platforms Stock: A Buying Opportunity?

A sharp drop in a stock's price can often be an interesting buying opportunity. In any case, it is quite possible that the coming session will be particularly volatile for Meta stock.

If the trend is confirmed when the stock markets reopen this Thursday morning in the United States, the Meta group could then suffer a loss of capitalization of around 175 billion dollars. The price to pay according to Mark Zuckerberg for offering a long-term vision to investors. The CEO of the company could lose nearly 20 billion dollars and leave the top 10 richest people in the world.

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