Why is Meta stock tanking? 'The wrong number at the wrong time,' analyst explains - Yahoo Finance

Investors successful Meta banal wanted to perceive 1 happening connected the embattled company's net telephone precocious Wednesday: an acknowledgement by laminitis Mark Zuckerberg that leaner spending times were up arsenic margins person been squeezed by an ill-timed metaverse physique retired and a slowing advertisement market.

They heard the opposite.

The societal media level outlined astir 13% year-over-year disbursal maturation for fiscal twelvemonth 2023, good supra the Street's forecast of 7%. Meta volition intelligibly proceed to walk aggressively — contempt the prospects of a 2023 U.S. recession — connected Instagram, the metaverse, and VR hardware.

"With a caller CFO successful place, immoderate whitethorn reason the institution is being overly conservative," Deutsche Bank expert Benjamin Black wrote successful a enactment to clients, "and portion Meta typically lowers [operating expenditure] guidance passim the twelvemonth (as they did truthful acold twelvemonth to date), the elevated disbursal outlook is the incorrect fig astatine the incorrect clip for investors. Perhaps conscionable arsenic importantly, increasing Reality Labs (RL) expenses look to beryllium 1 root of the elevated disbursal usher arsenic RL operating losses are expected to turn importantly twelvemonth implicit twelvemonth successful 2023."

Meta shares crashed much than 20% successful pre-market trading connected Thursday. The ticker was atop the "Top Trending" conception connected the Yahoo Finance platform.

Here is however Meta performed successful the 3rd quarter, which disappointed investors:

• Revenue: $27.7 cardinal versus $27.4 cardinal expected

• Earnings Per Share (EPS): $1.64 versus $1.89 expected

• Facebook Daily Active Users (DAUs): 1.98 cardinal versus 1.86 cardinal expected

• Facebook Monthly Active Users (MAUs): 2.96 cardinal versus 2.97 expected

• Reality Labs operating loss: $3.67 cardinal versus $3.09 cardinal expected

The company's outlook besides wasn't precise good. Meta's 4th fourth gross guidance came successful betwixt $30 cardinal and $32.5 cardinal portion Wall Street was expecting $32.2 billion.

The House of Zuck besides announced that it volition beryllium pacing Reality Lab investments beyond 2023, but that spending volition beryllium importantly higher adjacent year.

Again, not what investors wanted to hear.

"We judge investors volition question META's FY23 guidance of ~15% disbursal maturation and ~13% capex maturation into a slowing integer advertisement market. Our biggest interest is the payback play for Meta's combined ~$130 cardinal successful capex/opex for FY23, which could instrumentality years to amended the gross maturation trajectory," Jefferies expert Brent Thill said successful a lawsuit note.

Yahoo Finance's tech squad of Alexandra Garfinkle and Dan Howley contributed to this story.

Brian Sozzi is an editor-at-large and anchor astatine Yahoo Finance. Follow Sozzi connected Twitter @BrianSozzi and connected LinkedIn.

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