Shares of Meta Platforms (META -1.31%), the Facebook parent, were falling today on a number of concerns, including fears about the company's earnings report after hours today, a post-earnings sell-off in rival Alphabet, and an errant report from Bloomberg that showed the company missing revenue estimates in the first-quarter earnings report.
Facebook stock was down 2.8% heading into the close.
The decline in Meta stock today seemed to be mostly over fears that the company could miss estimates again in its report after hours, which comes at a time when market sentiment has turned sharply against the tech sector.
The Facebook owner missed expectations badly in its last report and guided for revenue growth of just 3% to 11% for the first quarter, down sharply from its historical norm. The company is struggling with competition from TikTok as well as Apple's ad tracking transparency initiative, which has hurt its advertising business, and it has been pouring money into Reality Labs, its division devoted to building technology for the metaverse, with little to show for it so far.
A report from Bloomberg briefly triggered a sell-off this afternoon after it erroneously reported that Facebook missed estimates, though the media company quickly said the report was mistaken.
Finally, a sell-off in Alphabet stock also seemed to push Meta shares lower today. While the Google parent's report was mostly in line with estimates, earnings per share fell because it took a mark-to-market loss on investments, growth in YouTube slowed down, and it lost nearly $1 billion in Google Cloud despite strong growth.
Analysts see Meta's first-quarter revenue increasing 19% to $28.2 billion, but expect earnings per share to fall from to $3.30 to $2.56, a reflection of the increased spending on reality labs.
It's a good bet that Meta will swing significantly in one direction or another after hours as the stock is at a pivotal juncture. If the metaverse doesn't take off as CEO Mark Zuckerberg believes, the company will be saddled with tens of billions of dollars of losses with nothing to show for it.