Meta Shares Plunge 26% on Weak Forecast and First-Ever User Drop
Meta experiences a historic single-day stock drop as the company reports its first decline in daily active users and issues a disappointing revenue forecast. Apple's privacy changes and expensive metaverse investments heavily weigh on the social media giant's outlook.
Meta shares plummet more than 26 percent in the company's largest single-day drop ever, wiping out over $230 billion in market value. This massive sell-off follows a weak first-quarter revenue forecast of $27 billion to $29 billion, which falls significantly short of the $30.15 billion analysts expect. Additionally, the tech giant reports its first-ever quarterly decline in daily active users.
The company faces severe headwinds from Apple's iPhone privacy changes, which disrupt ad-targeting capabilities and cost Meta an estimated $10 billion in annual revenue. Broader macroeconomic challenges, including inflation and supply chain disruptions, further strain advertiser budgets and contribute to the disappointing financial guidance. These factors overwhelm the fact that Meta actually beats fourth-quarter revenue estimates.
Meta also details the heavy financial burden of its ongoing pivot toward the metaverse, with its new Reality Labs segment posting an operating loss of $3.3 billion on just $877 million in revenue. JPMorgan analysts respond by downgrading the stock, citing a significant slowdown in advertising growth alongside an expensive and uncertain multiyear transition. The company continues to push lower-revenue short-term products like Instagram Reels in hopes of securing future growth.