What happened
Shares of Meta Platforms (META +1.33%) tumbled again on Monday, falling as much as 6.7%. By 1:54 p.m. ET the stock was still down 6.4%
The social media titan continues to suffer the consequences of its troubling third-quarter financial results, while an outage on its Instagram platform compounded matters today.
NASDAQ: META
Key Data Points
So what
After years of giving Meta Platforms carte blanche, some investors appear to be losing confidence in the company's direction. Last week, Meta announced its second successive quarter of year-over-year revenue declines -- something that had never happened in the company's history prior to last quarter. While revenue fell just 4%, it resulted in a 49% decline in earnings per share.
To add insult to injury, CEO Mark Zuckerberg seemed to downplay the ongoing macroeconomic issues and disappointing financial results, instead doubling down on his metaverse spending. "We expect Reality Labs expenses will increase meaningfully again in 2023," the chief executive said on the conference call to discuss the results. Zuckerberg went even further, saying the company expects Reality Labs' operating losses next year "will grow significantly," with apparently no end in sight.
Investors are right to be concerned. During the first nine months of 2022, Meta's metaverse-centric Reality Labs generated $1.4 billion in revenue, but lost $9.4 billion, the result of heavy spending.
Finally, if Meta wasn't facing enough challenges, reports emerged early Monday that Instagram was down across large swaths of the community. Some users reported that their accounts appeared to be suspended, though some are now back up and running.
Now what
Investors are thus far unimpressed with Meta's heavy spending on the metaverse, with little to show for its troubles. Furthermore, these issues combined with the macroeconomic uncertainty and the ongoing bear market have wreaked havoc on Meta's stock, which has tumbled 73% so far this year.
Still, it's hard to bet against a company with 3.71 billion monthly users and billions of dollars in free cash flow each year. Meta no doubt 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.
