The company Meta (Facebook) reported this evening (Wednesday) on revenues of 27.7 billion dollars in the third quarter and a profit of 1.64 dollars per share.
The analysts covering the company estimated thatMeta will report lower profits and revenues than in the corresponding quarter last year. In the top line, the expectation was for a decrease of 5.5%, so that the revenues will amount to 27.4 billion dollars in the quarter. In the bottom line, the forecasts are even more pessimistic: the profit was expected to be cut and stand at $1.89 per share.
In response, Meta’s stock is down about 8% in late trading after a 5.6% drop at the close of trading on the Nasdaq.
This is one of the most difficult years for Zuckerberg and Meta since the IPO. The company faced major storms last year: the first and central one that Meta wants the public to forget – the publication of the internal documents by a former employee, Francis Haugen, from which it is claimed, among other things, that the company preferred maximizing profits over the safety of users. Along with this storm, the company had to deal with a 7-hour malfunction last year for all the company’s services, and finally the name change and the familiar change of direction – from Facebook to Meta.
The company took a clear direction last year, because the metaverse, the emerging virtual worlds, are the future of the Internet. And so, at its annual launch event that was about two weeks ago, Zuckerberg presented how the metaverse is flourishing (such as the following figure: sales of games and applications in the Meta Quest Store, reached more than 1.5 billion dollars). Zuckerberg understands how much he needs to make the public fall in love with the company’s vision again, which is why he brought a significant stamp to the event: a collaboration with the technology giant Microsoft to adapt its office services to Meta’s platforms. In other words – not Zuckerberg’s dream, but the dream of the entire industry.
However, investors are very skeptical. Meta stock has been cut more than 60% in the past year. In terms of market value, in September of last year Facebook reached its peak value – 1.07 trillion dollars, while today the current market value of the company is about 350 billion dollars.
Another significant headline that will affect the company’s reports soon: the Competition and Markets Authority in Great Britain recently announced that Meta will have to sell Giphy, which it purchased in May 2020 for $315 million. The claim was that this is a violation of competition and it is impossible to allow this. Experts wondered how much of this was a sign of things to come for Instagram and WhatsApp, which it previously acquired.
“This move can teach us a lot. This is exactly what the regulators in the United States are saying, they are looking for ways to break up these huge companies,” Prof. Anat Alon-Beck, an expert in American corporate law from Case Western University, explained to Globes. “This is definitely a precedent. Giphy is a kind of monopoly in itself, and its annexation to Meta may increase Meta’s dominance in the field of social networks and advertising. That is why it is so important for regulators to curb it,” she explained.
Another significant matter that greatly affected Meta’s activity in the last year is the change in Apple’s privacy policy – which prevents applications from tracking users outside of the application. This week it was even announced that Apple will require that every purchase and payment for promoting posts on a social network go through its payment system. Meaning: charging a 30% commission that will be transferred directly to Apple from each transaction. Otherwise, the apps will be removed from the app store.