Shares of Facebook parent Meta Platforms lost more than a quarter of their value Thursday, bringing other social media stocks down as well. The drop in FB stock follows its fourth-quarter earnings report that came in well below expectations.
Meta is now trading at the lowest level since July 2020. Meta is the sixth-largest company in the Nasdaq and S&P 500. It's market-cap loss of $219.7 billion so far today would make it the largest single-day market value decline on record among U.S. companies, according to Dow Jones Market Data.
Late Wednesday, Meta reported adjusted earnings of $3.67 a share on revenue of $33.67 billion. Analysts expected Meta to report earnings of $3.85 on revenue of $33.7 billion, according to FactSet. Revenue climbed 20% from the year-ago period, representing its slowest growth in six quarters.
Facebook expects first-quarter revenue to be in the range of $27 billion to $29 billion, which is growth of 3%-11%. Wall Street expected $30.2 billion.
"We expect our year-over-year growth in the first quarter to be impacted by headwinds to both impression and price growth," Facebook said in the earnings release.
FB stock tanked 26.4% to close at 237.60 on the stock market today.
Other social media stocks that dropped include Snap, down 23.6% to 24.50, and Pinterest, sinking 10.3% to 24.51.
Warnings Of Earnings Uncertainties
Meta previously warned of uncertainties about the earnings report. This includes continued headwinds from the changes Apple made to its operating system. The changes give users more control over privacy. However, it's now harder for advertisers to track ad performance.
Meta gets almost all of its revenue from advertising. It's the second-largest digital ad platform in the world after Google-parent Alphabet.
The transformation of Facebook kicks off with a new financial reporting structure consisting of two sectors.
One sector, called Family of Apps, includes detailed data on Facebook, Instagram, Messenger, WhatsApp and other services. The other sector is called Facebook Reality Labs. That's the metaverse side of the company. This category involves augmented- and virtual-reality hardware, software and content.
FB Stock: Breaking Out Results Of Units
Also, this will be the first time FB stock is breaking out the results of its augmented- and virtual-reality hardware unit. Facebook previously warned that Reality Labs would not be profitable anytime soon. That's due to the $10 billion metaverse investment.
Revenue from Family of Apps reached $32.9 billion, up 16%, with operating income of $15.9 billion. Revenue from Reality Labs jumped 57% to $877 million, with an operating loss of $3.3 billion.
Facebook reported daily active users of 1.93 billion, below estimates of 1.95 billion. Monthly active users of 2.91 billion fell short of the 2.95 billion expected.
In addition, Facebook expects expenses to be in the range of $90 billion to $95 billion for 2022, above its previous forecast of $91 billion to $97 billion.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
