Market Analysts Give Zuckerberg Thumbs Down for Meta Guidance
MENLO PARK (KPIX) -- Facebook's parent company Meta had a lackluster day on Wall Street Friday, one day after setting a record for the largest one-day value drop in stock market history.
On Thursday, the company lost $232 billion or 26% of its market cap.
"For the first time I'm starting to hear people from Wall Street, who have some doubts and see some vulnerabilities in what Mark Zuckerberg is doing," said Jon Swartz at Marketwatch.
Swartz said Meta is dealing with a "laundry list of business pressures."
Most notably, on the company quarterly earnings call, CFO David Wehner projected the company would lose about $10 billion in 2022 in ad revenue, about 8% of the annual revenue. Wehner cited Apple's new iOS upgrade feature dubbed "App Tracking Transparency" that allows users to block apps from tracking users' behavior.
"We believe the impact of iOS overall is a headwind on our business in 2022," said Wehner.
CEO Mark Zuckerberg told investors Apple's changes were "a clear trend where less data is available to deliver personalized ads."
For the first time in the company's 18-year history, the family of apps, Facebook, Instagram, Messenger and WhatsApp, lost half a million users worldwide from Q3 to Q4.
The company is sinking billions of dollars into the Metaverse, reporting a 2021 net loss of $10.19 billion, on revenue of $2.27 billion. Analysts predict the new VR world will likely be in the red, continuing to drag down profits for several quarters.
Tik Tok and Snap are adding to the company's troubles by capturing new, younger generations of users.
"I think the younger people have just bypassed Facebook, they're going to Tik Tok, they're going to perhaps even just Snap," said Swartz. "[Meta] is not going to lose several billion people overnight from their service. It's addictive. I know they know that. So they'll keep people, but they're not going to be as engaged as they were before. They're not going to add as many people as they have before. And they're not going to be able to drill deeper into their advertising data because of Apple."
"Wall Street investors are clearly spooked about the fact that Facebook has kind of hit this wall, in terms of its growth. Facebook has always been vulnerable, there's always a chance for someone to come along and and take from it," said CNet editor Ian Sherr.
Sherr said on the earnings call, Zuckerberg did not outline a clear solution, or instill confidence.
"Right now he's still running the world's largest social network. They are printing money hand over fist. That is not the issue. The question is the future, and that is what is a little less clear today. He didn't give a very strong answer for what he's going to do to reverse these problems," said Sherr.
The historic collapse in Meta's shares this week wiped $31 billion off Zuckerberg's personal wealth, taking him down three places on Bloomberg's list of the world's richest people.
He now stands in 10th place on the Bloomberg Billionaires Index, behind Oracle co-founder Larry Ellison and just a few hundred million dollars above India's energy-to-tech entrepreneur, Mukesh Ambani. Tesla CEO Elon Musk tops the list by a wide margin.