Ouch! Shares of social network Meta Platforms (META 1.26%) were absolutely crushed on Wednesday. First, the stock fell nearly 6% during regular trading hours as many tech stocks sold off. But the real damage came in after-hours trading, when the stock fell as much as 19% at one point. And keep in mind that shares were already down more than 60% year to date going into this week.

What's driving the huge stock-price decline, even though the Facebook parent's shares have already been beaten up? The social media company reported a disappointing third quarter, featuring a year-over-year revenue decline, a big decrease in earnings per share (EPS), and a forecast for another top-line decline in Q4 and higher expenses next year.

Let's break down some of the biggest problems from Meta's earnings report.

Dismal revenue trends

While Meta's third-quarter revenue of $27.7 billion beat analysts' average forecast for revenue of $27.4 billion, investors should note that it still notably represents a 4% year-over-year decline. This is worse than the company's 1% year-over-year decline in Q2. 

But the biggest disappointment surrounding the company's top line was management's guidance for an even worse decline in Q4. The midpoint of management's fourth-quarter revenue guidance called for a year-over-year decline of 7% during the period. 

To be fair, Meta chief financial officer David Wehner said the company's fourth-quarter guidance assumes a 7% headwind from exchange rates to its year-over-year revenue growth in the fourth quarter.

Rising expenses

Perhaps even more concerning was the company's surge in expenses. Costs and expenses increased 19% year over year during the quarter. Combining its deteriorating revenue with its surging expenses, Meta's operating margin narrowed from 36% in the year-ago quarter to 20%, leading to a 52% year-over-year decline in earnings per share.

This helps explain the company's earnings miss. The consensus analyst estimate called for earnings per share of $1.89 -- $0.25 higher than Meta's reported EPS of $1.64.

Looking ahead, management expects expenses to continue rising. Meta expects 2023 expenses to be between $96 billion and $101 billion, up from the company's forecast for $85 billion to $87 billion in expenses this year.

Terrible results from reality labs

Finally, there's the atrocious results from the company's cash-burning reality-labs segment, which includes augmented and virtual reality hardware, software, and content. Segment revenue fell from $558 million in the year-ago period to $285 million, while the nascent business's loss from operations grew from $2.6 billion to nearly $3.7 billion.

Some of Meta's current challenges may be temporary. Chief among the headwinds the company will likely overcome is weakening marketer budgets as companies pinch pennies on their advertising budgets to cope with an uncertain and challenging macroeconomic backdrop. But a top-line decline, plummeting earnings, a forecast for significantly higher expenses next year, and a cash-burning reality-labs segment all combine to make Meta look like it's operated by an undisciplined management team.

Perhaps Meta will prove the doubters wrong in the long term and its move to keep spending aggressively in this market will eventually pay off. But it's easy to see why some investors are clearly losing faith in the company.