The stock fell as much as 24%, the most intraday since July 2012. It was down about 17% to $163.69 at 9:34 a.m. in New York.
The results “fell well below consensus,” said James Cordwell, an analyst at Atlantic Equities LLP in London. “This is clearly a very significant miss by the company, which has led to a knee-jerk reaction in the share price.”
Facebook said late Wednesday that it expects revenue of $16.5 billion to $17.4 billion for the fourth quarter, below analysts’ estimates of $18.2 billion, according to data compiled by Bloomberg.
The company said that while ad revenue growth is expected to decelerate, the main reason for the shortfall is that it’s now forecasting expense growth of 47% to 50%, up from prior expectations in the high 30% range. Meta attributed the increased spending on metaverse-related projects, the short-video offering Reels, artificial intelligence, and virtual reality.
“In the face of growing competition, investing more on products that are still unproven is a bold and high-risk strategy,” said Naeem Aslam, chief market analyst at AvaTrade. “It remains to be seen whether the market will reward Facebook for its ambitious bets or punish it for chasing growth at any cost.”
Meta had previously acknowledged headwinds from changes to Apple Inc.’s operating systems, which limit ad tracking. The company also faces increasing competition from rivals such as TikTok, especially for younger users.
The advertising environment is also more challenging, with brands grappling with inflationary pressures, supply-chain issues and the war in Ukraine.
Snap Inc. and Pinterest Inc., two other social-media companies, also gave downbeat outlooks this week, citing the uncertain macroeconomic environment.
For Facebook’s third quarter, revenue rose 20% to $29 billion. Net income dropped 52% to $4.4 billion.
(Updates with analyst comment in fourth paragraph.)
