By
Chimamanda U. Martha
April 12th, 2024
Facebook’s latest earnings reports have a mixed bag of commentary from market analysts. The company is looking to invest into new avenues while devoting significant resources towards building metaverse.
On Tuesday, October 26, social media tech giant Facebook Inc (NASDAQ: FB) announced its earnings report for the third quarter (Q3) 2021. A mixed bag of results also reflected on the FB stock price on Wall Street.
Performance of Facebook in Q3 2021
FB stock lost all its early day’s gains tanking 4% by the end of the day and closing at $315 levels. The social media giant managed to beat on earnings but missed on revenue. The earnings per share (EPS) was 18.8% up from the same quarter of the previous year. Although the revenue jumped 35.1% year-over-year, it missed analysts’ estimates.
The good thing was Facebook’s monthly active users (MAUs) grew by 6% compared to a year ago and reached 2.9 billion. MAU is the key metric for Facebook to determine the size of its global active user base. In the official earnings report, Mark Zuckerberg, Facebook founder and CEO said:
“We had a strong end to the year as people and businesses continued to use our services during these challenging times. I’m excited about our product roadmap for 2021 as we build new and meaningful ways to create economic opportunity, build community and help people just have fun.”
Starting Q4 FY 2021, Facebook is also considering rolling out separate financial results for its Facebook Reality Labs (FRL). This segment focuses entirely on the company’s virtual and augmented reality services.
CEO Mark Zuckerberg also said that Facebook is increasingly focusing on investing more resources in “metaverse”. Besides, the company is also eyeing 10,000 job creations in the European Union over the next five years for building the metaverse. Unlike other tech companies, the FB stock hasn’t performed as well with 18% returns year-to-date. In fact, giants like Tesla have overtaken Facebook to hit the trillion-dollar mark.
Analysts’ Commentary on FB Stock
As said, the FB stock has underperformed the rest of its peers. The company has undergone major challenges like dealing with Apple privacy issues. However, the impact of the Apple advertisement ban hasn’t been as severe as some analysts expected. But this doesn’t bring Facebook completely out of the woods.
Mark Mahaney, head of internet research at Evercore ISI, said that the social media giant was well-prepared for the Apple advertisement changes. Mahaney added:
“Snap disappointed people last week and Facebook just did, too. I’m struggling to recall the last time that Facebook missed revenue and lowered revenue estimates like this. The good news is, however, that unlike Snap, Facebook management told people about this IDFA [Identifier for Advertisers], this Apple risk, they’ve been talking about it for a year, and then the stock got slapped down because of that, slapped down because of the Snap results and so the risk-reward wasn’t nearly as … tilted as it was for Snap.”
Nadine Terman, founder and CEO of Solstein Capital notes that Facebook has been investing to offset weakness in the core business. Terman added:
“They have to invest because they’re not getting the growth in their initial businesses. And so as an investor, that should be an area of concern which gets to the point that many folks here made which is, is it because they’re not getting the takeup in the younger generation?”