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The company said that Apple’s privacy changes have cost their ad revenue to the tune of $10 billion during the fourth quarter of 2021. The company also reported an additional $10 billion loss in its AR/VR operations.
On Wednesday, February 2, Facebook’s parent company Meta (NASDAQ: FB) reported its Q4 2021 results disappointing the Street in a big way. The FB stock plunged a straight 22% in the aftermarket hours to trade under $250. It means Meta has eroded more than $200 billion of investors’ wealth in a single day.
Meta in Q4 2021
Such a sharp reaction followed after Facebook reported a decline in its daily active users for the first time in 18 years. Last quarter, Facebook’s daily active users dropped to 1.929 billion from 1.930 billion. Despite being a marginal drop it has led to major negative sentiment.
Meta claimed that it faced major hits after Apple Inc (NASDAQ: AAPL) made privacy changes to its operating system. This has made it harder for brands and businesses to target customers on Facebook and Instagram. Additionally, the stock was under major pressure after Facebook said that it is expecting slowing revenue growth due to rising competition.
Currently, Facebook is the second-largest digital-ad platform globally after Google. During yesterday’s conference call, Meta’s chief financial officer, Dave Wehner said that the company’s losses due to Apple’s privacy changes could be to the tune of $10 billion. Speaking to Reuters, Insider Intelligence analyst Debra Aho Williamson said:
“It’s clear that there are many big roadblocks ahead as Meta faces tough new competition for ad revenue such as TikTok, and as it contends with ongoing ad targeting and measurement challenges from Apple’s iOS changes”.
Facebook Reality Labs Reports $10.2 Billion Loss
In its Q4 2021 results, Meta reported that it has lost a staggering $10.2 billion last year in its newly created Facebook Reality Labs (FRL) division. This division looks after the company’s virtual and augmented reality operations. It was for the first time that the company had broken out this segment in its results.
This loss surged compared to the $6.6 billion loss in the previous year. Besides, company CEO Mark Zuckerberg that heavy investments in this area would reduce the company’s operating margins by $10 billion. But Zuckerberg remains optimistic of the developments taking place in this space. He said:
“I’m encouraged by the progress we made this past year in a number of important growth areas like Reels, commerce, and virtual reality, and we’ll continue investing in these and other key priorities in 2022 as we work towards building the metaverse”.
With Facebook on a massive transition, investors need to be clear. Their investment is not just an investment in Facebook’s ad platform but a belief in the future of metaverse.