Meta Platforms’ Shares Sink After Earnings Miss and Weak Forecast

February 03, 2022 10:25

Today, at 12:00 GMT, the Bank of England (BoE) will announce their latest interest rate decision, shortly followed the European Central Bank (ECB) at 12:45.

Whilst the ECB is expected to leave policy unchanged for the time being, the BoE is widely anticipated to announce a rise in interest rates for the second time in as many months, following the previous hike at their last policy meeting in December.

Given the current high rate of inflation, 5.1% in the eurozone and 5.4% in the UK, there is a lot of focus on these central bank policy meetings. Traders should expect increased volatility in the markets around the announcement times, particularly if the outcomes are any different to what is expected.

Meanwhile, earnings season continues in earnest.

Unsurprisingly, given the increasing price of oil and gas, Shell (no longer Royal Dutch) reported strong fourth quarter results this morning, with profit at its highest level in eight years.

Elsewhere, after excellent results from Google-parent Alphabet on Tuesday, yesterday was the turn of Facebook owner Meta Platforms. Unlike Alphabet, Meta Platforms' quarterly results fell short and the social media company posted a poor forecast for the current quarter.

Meta Platform’s total revenue in Q4 grew 20% year-on-year (YOY) reaching $33.67 billion, exceeding the expected $33.34 billion. However, due to a large increase in total costs, earnings per share (EPS), which had been expected at $3.85, was reported as $3.67 per share, a decline of 5% YOY.

Moreover, for the first time, daily active users of Facebook declined from the previous quarter to 1.929 billion, down from 1.930 billion, whilst monthly active users remained the same.

For the current quarter, Meta Platforms forecast total revenue in the range of $27 billion - $29 billion, which was significantly lower than analysts’ expectations of $30.15 billion. Increased competition for users and Apple’s iOS privacy changes were cited as reasons for the weaker than expected forecast.

In response to this news, Meta Platforms share price fell a massive 20% in after-hours trading, erasing around $200 billion of its market capitalisation, and there were similar declines in other social media stocks. Twitter, Pinterest and Snap Inc are all down by around 6.5%, 7% and 14% respectively in pre-market trading.

This evening, the last of the FAANG stocks, Amazon, are due to release their results for the final quarter of 2021.

Depicted: Admirals MetaTrader 5 – Meta Platforms (FB) Daily Chart. Date Range: 3 June 2021 – 2 February 2022. Date Captured: 2 February 2022. Past performance is not a reliable indicator of future results.

Depicted: Admirals MetaTrader 5 – Meta Platforms (FB) Weekly Chart. Date Range: 2 August 2015 – 2 February 2022. Date Captured: 2 February 2022. Past performance is not a reliable indicator of future results.

 

Invest with Admirals

With an Invest.MT5 account from Admirals, you can buy shares in Meta Platforms, Amazon and over 4,300 other listed companies from 15 of the largest stock exchanges in the world! Click the banner below in order to register for an account today:

Invest in the world’s top instruments

Thousands of stocks and ETFs at your fingertips

 

INFORMATION ABOUT ANALYTICAL MATERIALS:  

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:  

  1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  4. The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
  6. Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
Roberto Rivero
Roberto Rivero Financial Writer, Admirals, London

Roberto spent 11 years designing trading and decision-making systems for traders and fund managers and a further 13 years at S&P, working with professional investors. He has a BSc in Economics and an MBA and has been an active investor since the mid-1990s