Wehner didn’t provide specifics but said on the call that “we do expect Reality Labs operating loss to increase meaningfully in ’22.” But it’s a near-term drag on earnings: Losses for Meta’s Reality Labs segment were $10.2 billion for the full year on revenue of $2.27 billion. Meanwhile, Facebook’s recent rebranding as Meta is intended to launch the social powerhouse into the “metaverse,” with the company investing in new AR and VR tech, products and experiences. To be sure, Zuckerberg’s pointing to TikTok as a growing rival is partly aimed at governments and regulators - an attempt to demonstrate that it does not have a monopoly in the social-media sector. “The thing that is somewhat unique here is that TikTok is so big as a competitor already and also continues to grow at quite a fast rate off of a very large base.” And this is why our focus on Reels is so important over the long-term, as is our work to make sure that our apps are the best services out there for young adults,” Zuckerberg said in his initial remarks. “People have a lot of choices for how they want to spend their time and apps like TikTok are growing very quickly. TikTok last fall said it had more than 1 billion monthly users worldwide for the short-form entertainment app. “We face a competitor in TikTok that is a lot bigger, so it will take a while to compound and catch up there,” he said. Zuckerberg positioned Meta as playing catch-up to TikTok, owned by Chinese tech giant ByteDance. BMO Capital Markets internet and media analyst Dan Salmon downgraded the stock to “market perform” and chopped his 12-month price target from $425 to $290/share, citing “lower estimates and lower valuation due to greater competitive pressure and lower conviction in timing and impact of targeting/measurement improvements.” Multiple analysts cut price targets on Meta in the wake of the Q4 earnings report. Zuckerberg described the short-form video app as a meaningful competitor, mentioning TikTok five times on the call.Īccording to Meta, it faces “increased competition for people’s time and a shift of engagement within our apps towards video surfaces like Reels, which monetize at lower rates than Feed and Stories.” The company first launched Reels, its copycat of TikTok, on Instagram in mid-2020. The company estimates a roughly $10 billion economic impact in 2022 stemming from Apple’s iOS changes, which limit Meta’s ability to target and measure ads, CFO Dave Wehner said on the Q4 earnings call. Facebook, Meta’s flagship social network, now has more than 2 billion daily users, up more than 70 million from a year ago.Among the revenue “headwinds” Meta execs cited for its massive ad biz in the first quarter of 2022 were a bigger impact from Apple’s iOS privacy changes and new EU regulations, as well as “macroeconomic challenges” leading to reduced marketing budgets. Those cuts came during a quarter that was otherwise an improvement for the company. Meta cut 11,000 jobs, or 13% of the workforce, in November in its first-ever major layoff. The company faced a decline in advertiser demand due to weakness in the broader economy as well as a change in privacy rules on Apple Inc.’s iPhone, which made it harder for Meta to offer targeted ads. Meta, whose shares have gained 27% so far this year, is on the rebound after the worst year for its stock in history. “Advertising demand hasn’t really improved, but it hasn’t gotten significantly worse either,” Spiegel said on a conference call. Snap said it expected sales to decline in the current period, with CEO Evan Spiegel remarking that the ad slump appears to be bottoming out. Snap Inc., the parent of rival social-media app Snapchat, gave a less upbeat outlook on Tuesday, sending its shares down 10%.
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