Despite being one of the social media giants to incorporate the metaverse, Meta shares dropped by more than 22 percent. Along with this, the recent report also showed that the number of daily users decreased as well.
Meta Shares Decline 22% On Lower Profits
Meta, the corporation that owns Facebook, Instagram, and WhatsApp, saw its stock plummet after remarkably high investments on its "metaverse" project, which resulted in an unusual drop in its fourth-quarter profit.
In after-hours trading, Meta's shares dropped 22.6 percent to $249.90.
ABC News reported that if the decline continues until the market opens on Thursday, the company's market capitalization - or total value - will plummet by about $200 billion.
To further emphasize, in the final three months of 2021, the Menlo Park, California-based social media firm made $10.29 billion, or $3.67 per share. This is relatively eight percent lower from $11.22 billion, or $3.88 per share, in the same quarter last year.
Additionally, revenue increased by 20 percent to $33.67 billion.
According to a FactSet poll through ABC News, analysts were anticipating earnings of $3.85 per share on revenue of $33.36 billion.
During the quarter, Meta put a lot of money into its Reality Labs sector, which includes virtual reality headsets and augmented reality technology, which accounted for a lot of the profit drop. In addition, the company expects revenue to be lower than analysts' projections for the current quarter.
Read Also: PS5 Sold 17.3 Million Units, Behind PS4 Sales: 5 Tips To Be Updated For The Next PS5 Restock
For those who do not know what metaverse is, Zuckerberg explained through NPR that it is a "virtual environment" that people can enter instead of just staring at on a screen. It is basically an universe of infinite, interconnected virtual communities where people can meet, work, and play utilizing virtual reality headsets, augmented reality glasses, smartphone apps, and other technologies.
Moreover, an expert who analyzes developing technologies Victoria Petrock claims that it will also include other areas of online life such as shopping and social media.
Meanwhile, because the CEO believes that the metaverse will be a large part of the digital economy, Zuckerberg believes that it will be the next phase of the internet. In the future years, he expects people to start thinking about Meta as a "metaverse firm," rather than a social network corporation.
Along with the shares drop, it appears that Meta decreases number of daily users too.
Meta Decreases Number Of Daily Users Too
Facebook's user growth has generally been up and to the right since its beginning, but the recent report disclosed the fall in global daily users, as well as lower-than-expected ad growth, per The Verge.
The enormous stock collapse, which wiped out about $200 billion in market value in an instant, demonstrates that Facebook's corporate rebranding to Meta isn't enough to divert investors' attention away from the company's main social network operation.
Not only was user growth on Facebook, Instagram, and WhatsApp practically flat in the third quarter, but the main Facebook app lost 1 million daily users in North America, where it earns the most money from advertising.
This resulted in a global fall in Facebook daily users, which a company spokeswoman acknowledged is the first sequential drop in the business's history.
The decline in daily users to 1.929 billion from 1.93 billion in the previous quarter is likely due to Facebook's decreasing relevance among young people. Instagram's user counts aren't given out by Meta, but daily users across all of its apps increased by just 10 million to 2.82 million in the third quarter.
