Why Meta Platforms Stock Failed (Again) Monday Morning

Why Meta Platforms Stock Failed (Again) Monday Morning

Why Meta Platforms Stock Failed (Again) Monday Morning

What happened

shares of Meta platforms (META -6.09%) It fell again on Monday, down 6.7%. As of 1:54 p.m., shares were still down 6.4%.

The social networks The titan continues to suffer the effects of troubling third-quarter financial results, while an outage on the Instagram platform has compounded its woes today.

So what

After years of giving Meta Platforms carte blanche, some investors seem to be losing confidence in the company’s direction. Last week, Meta reported a second quarter of year-over-year revenue declines — something that had never happened in the company’s history. last quarter. Although revenue was down just 4%, it resulted in a 49% drop in earnings per share.

To add insult to injury, CEO Mark Zuckerberg seemed to be downplaying the ongoing macroeconomic issues and disappointing financial results, instead doubling down on spending in the metaverse. “We expect Reality Labs spending to increase significantly again in 2023,” the CEO said on a conference call to discuss the results. Zuckerberg went further, saying the company expects Reality Labs’ operating losses to “grow significantly” next year, with seemingly no end in sight.

Investors have reason to be concerned. In the first nine months of 2022, Meta’s metaverse-centric Reality Labs generated $1.4 billion in revenue, but lost $9.4 billion due to heavy spending.

Finally, if Meta wasn’t facing enough challenges, it was reported to be down by large parts of the Instagram community early Monday morning. Some users have reported that their accounts appear to be suspended, although some are now back up and running.

now what

Investors are not impressed with Meta so far heavy spending in the metaverse, with little to show for his troubles. Moreover, these problems coincided with ongoing macroeconomic uncertainty bear market have wreaked havoc on Meta’s shares, which have fallen 73% this year.

Still, it’s hard to bet against a company with 3.71 billion monthly users and annual free cash flow. Meta certainly has the resources to right the ship and weather this storm. For those with patience and a long-term outlook, the stock remains a buy.

Randi Zuckerberg, former director of market development and Facebook spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Danny Vena He holds positions in Meta Platforms, Inc. The Motley Fool has positions in and recommends Meta Platforms, Inc. disclosure policy.

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