Meta Platforms (META 2.20%) stock is getting hammered this week following the company's disastrous fourth-quarter earnings report. The company's share price is down by roughly 21.2% from last Friday's market close, according to data from S&P Global Market Intelligence.
The social media giant published its quarterly results after market close on Wednesday, and performance was worse than expected almost across the board. It delivered earnings per share of $3.67 on revenue of $33.67 billion, while the average analyst estimate had called for earnings per share of $3.84 on sales of $33.4 billion. While it did post a slight top-line beat and exceeded the analysts' consensus estimate for average revenue per user, the rest of the report was filled with bad news.
Meta Platforms' user engagement numbers fell short of the market's expectations in Q4. The company recorded 1.93 billion daily active users (DAUs) and 2.91 billion monthly active users (MAUs). Meanwhile, the analysts' consensus predictions had been for 1.95 billion DAUs and 2.95 billion MAUs.
Average revenue per user of $11.57 in the period did beat the market's forecast of $11.38, but the number of daily active users declined for the first time in the company's history, and Meta's disappointing results shocked the market. Management chalked the relatively soft performance up to macroeconomic headwinds and user-privacy changes on Apple's mobile operating system.
Meta Platforms is making huge investments to give itself what it intends to be a leading position in the metaverse, and it looks like this push will create a significant drag on earnings in the near term. To make matters worse, sales growth in the near term also looks primed to come in below the market's recent expectations. Management is guiding for sales in the $27 billion to $29 billion range for the first quarter, while the average estimate of analysts polled by Refinitiv had called for revenue of $30.15 billion. Meta management is calling for roughly 7% year-over-year sales growth in Q1, which would be a dramatic deceleration from the 48% year-over-year sales growth the company posted in 2021's first quarter.
For long-term investors, this sell-off could present an opportunity to build a position in an industry leader at a discount. However, with the tech giant's weak Q4 report just behind it and widespread doubts about the quality of its growth engine looming ahead, Meta Platforms' stock could remain volatile in the near term.