The company Meta Platforms also expects less revenue from advertising, according to a trading update, mainly due to increased inflation.
Meta expects first-quarter revenue of between $27 billion and $29 billion. That would mean a growth of between 3 and 11%, much lower than what experts generally expected.
Earnings per share of the Mark Zuckerberg group for the previous three months came in at $3.67, where the market hoped for twenty cents more. Quarterly sales rose 20% compared to the same months in 2020 to $33.67 billion, well above the consensus that analysts had priced in: $33.4 billion.
Important for social media companies are the daily users. That number was still 1.93 billion lower than the market had estimated, which counted on 1.95 billion users. It also turned out that there were fewer active followers on Meta platforms every month, 2.91 billion people, versus 2.95 according to expectations.
Competition
As companies continue to suffer from all kinds of disruptions in the supply chain, they will cut their advertising budget, according to Meta Platforms, which also includes Instagram and WhatsApp.
The ad revenue isn’t the only problem. Meta also has to deal with stricter regulations. In addition, the company sees increasing competition. Within Meta, growth within the company is shifting to video platforms such as Reels, which on average generate less money than, for example, Feed and Stories. In addition, exchange rate effects are expected to have a negative effect on the company.
At Reality Labs, sales rose to $877 million. That was $717 million a year earlier. This business unit makes the hardware for virtual reality (VR) and augmented reality (AR) in which Meta will invest a lot of money in the coming years. The company sees a future in this and believes that we will all be in the metaverse in the foreseeable future. That is a virtual world where we can work, play games and meet up with friends.
Reality Labs lost $3.3 billion in the closing quarter. This further increases the cost of the component.