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Meta forecasts revenue miss and rising costs; shares dive 13%

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Meta forecasts revenue miss and rising costs; shares dive 13%
© Reuters. FILE PHOTO: Facebook’s new rebrand logo Meta is seen on smartphone in this illustration picture taken October 28, 2021. REUTERS/Dado Ruvic/Illustration

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By Katie Paul and Chavi Mehta

(Reuters) – Meta Platforms Inc painted a bleak picture of the company’s short-term growth prospects on Wednesday, forecasting fourth-quarter revenue slightly below analysts’ estimates even as it projected its expenses will continue to soar.

The disappointing results knocked about $40 billion off its stock market value in extended trade, with shares down 13%.

The Facebook (NASDAQ:META) parent company beat estimates for quarterly revenue, which fell 4% to $27.7 billion in the third quarter ended Sept. 30, from $29 billion last year.

That deepened a revenue decline begun the previous quarter, when the company posted a first-ever revenue drop of 0.9%, but was less steep than the 5.6% decline Wall Street had expected, according to IBES data from Refinitiv.

GRAPHIC: Meta’s revenue fell for a second straight quarter https://graphics.reuters.com/METAPLATFORMS-RESULTS/dwvkrbbwbpm/chart.png

More worrying was the company’s estimate that fourth-quarter revenue would be in the range of $30 billion to $32.5 billion, under analysts’ estimates of $32.2 billion.

Meta also forecast that its full-year 2023 total expenses would be in the range of $96 billion to $101 billion, up from a revised estimate for 2022 total expenses of $85 billion to $87 billion.

That includes an estimated $2.9 billion in charges in 2022 and 2023 related to “consolidating our office facilities footprint.”

Total costs for the third quarter came in above estimates at $22.1 billion, compared with $18.6 billion the year prior. Analysts had forecast around $20.6 billion.

Net income in the third quarter fell to $4.40 billion, or $1.64 per share, from $9.19 billion, or $3.22 per share, a year earlier, its worst showing since 2019 and the fourth straight quarter of profit decline.

Analysts had expected a profit of $1.86 per share.

Source: Investing.com

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