Facebook owner Meta's shares slump on earnings and costs

[MongiIG]

A rise in costs, headwinds from a failure to improve monetisation, and regulatory issues around access are all conspiring to drag down earnings at Meta Platforms. Both earnings and revenues were behind forecasts.

 

 Joshua Mahony | Senior Market Analyst, London | Publication date: Thursday 27 October 2022

Meta crashes nearly 21%

Another big mover was Meta last night. We did see the Facebook parent company crash almost 21% in extended trade as it continues to feel the heat of regulation, the fallout from social media intrusion, and the inability to continue to maximize its monetisation potential.

Meta chart

I wanted to show you the chart here for Meta because it's a pretty dramatic decline that we have seen here. The big downside move here on the daily timeframe highlighting the break that we see in the weekly through this key support level, 12289, that brings the lowest level that we've seen in Meta stock for over six years now.

So this is a major collapse that we're seeing in this stock and it really does provide warning signs for a number of tech stocks that are hoping to maintain valuations based on previous earnings and revenues.

When you've got high multiples and you're now no longer creating those same kind of levels, whereas people are pricing in higher growth in the future, then you're going to have potentially big problems and that's exactly what we're seeing here for Facebook.

EPS

In terms of its numbers, we did see earnings per share (EPS) of $1.64 versus expectations of $1.93 for earnings per share. Revenues were at $27.71 billion versus estimations of $27.57bn.

In terms of active users, that's one thing that people have been keeping an eye out for..We did see it come in largely as expected.