Meta shares continued to plunge to 19% in extended trading Wednesday after Facebook’s parent issued a forecast for the fourth quarter, which came up well short of expectations for earnings from Wall Street.
Meta is battling a broad slowdown in online ad spending, problems from Apple’s iOS privacy update, and increasing competition from TikTok. Meta has produced consecutive quarters of revenue declines and is expected to post its third straight drop in the fourth quarter.
The company said revenue for the fourth quarter would be $30 billion to $32.5 billion. Analysts were expecting sales of $32.2 billion. While revenue fell 4% in the third quarter, Meta’s costs and expenses rose 19% year-over-year to $22.1 billion. Operating income declined 46% from the previous year to $5.66 billion.
Read More: Meta Witnesses First-Ever Revenue Decline In Second Quarter Earnings
Meta’s operating margin, or the profits left after accounting for costs to run the business, sank to 20% from 36% a year earlier. Overall net income was down 52% to $4.4 billion in the third quarter. At an after-hours level of about $108, Meta is trading at its lowest since March 2016, eight months before Donald Trump’s presidential election.
Revenue in the Reality Labs unit, which houses the company’s virtual reality headsets and its futuristic metaverse business, fell by almost half from a year earlier to $285 million. Its loss widened to $3.67 billion from $2.63 billion in the same quarter last year. Reality Labs has lost $9.4 billion this year, and there’s no end in immediate sight.
Meta said it is holding some teams flat in headcount, shrinking others, and investing headcount growth only in our highest priorities. As a result, Meta expects headcount at the end of 2023 will be approximately in line with third-quarter 2022 levels.
