Meta inventory falls 24% on earnings miss, analyst downgrades

Shares of Meta plunged 24.5% Thursday as buyers and analysts digested the corporate’s third-quarter earnings miss and a weak fourth-quarter outlook. Shares closed at $97.94, the bottom value since 2016.

The mum or dad firm of Fb reported quarterly income of $27.7 billion Wednesday, a decline of greater than 4% yr over yr and its second straight quarterly decline. Its revenue plummeted 52% to $4.4 billion.

Meta warned the fourth quarter can be extra of the identical, issuing a weaker-than-expected outlook. It is anticipating income for the fourth quarter to be $30 billion to $32.5 billion. Analysts have been anticipating gross sales of $32.2 billion.

Meta CEO Mark Zuckerberg reiterated his dedication to spending billions of {dollars} growing the metaverse. Meta’s Actuality Labs unit, which is answerable for growing the digital actuality and associated augmented actuality expertise that underpins its plans for the metaverse, has misplaced $9.4 billion to date this yr.

Morgan Stanley downgraded the inventory Thursday, citing greater spending. Analyst Brian Nowak slashed his value goal to $105 from $205. He expects the corporate’s points to persist as Meta continues to extend spending to construct out its AI capabilities.

Cowen’s John Blackledge additionally downgraded Meta to market carry out from outperform, and lowered his value goal to $135 from $205 prior, citing the upper trajectory of working and capital bills. KeyBanc’s Justin Patterson lowered his ranking on the inventory to sector weight from obese, additionally citing the rising prices.

For the reason that begin of the yr, Meta shares are down by greater than 61%. It has been harm by competitors from rivals akin to TikTok, plus a broad slowdown in on-line advert spending and challenges from Apple’s iOS privateness replace.

— CNBC’s Michael Bloom contributed to this report.