Facebook owner Meta said it expected revenues in the first three months of this year to fall short of Wall Street expectations, citing “increasing competition”, sending its shares down more than 20 per cent in after-hours trading.
The company also posted on Wednesday an 8 per cent drop in profits for the fourth quarter to $10.2bn, squeezed by its investment in a digital avatar-filled virtual world known as the metaverse, as well as its virtual and augmented reality technology arm.
Facebook said that it expected revenues in the first quarter of 2022 to be in the range of $27bn to $29bn, between 3 and 11 per cent growth year-on-year.
That is below analyst expectations for first quarter revenue of $30.3bn, according to S&P Capital IQ, and marks a slowdown from the 20 per cent increase in revenues in the final quarter of 2021, when the company generated $33.7bn.
The company blamed “increased competition for people’s time” as well as “a shift of engagement within our apps” towards watching more short-form video, which bring in less money than advertising showcased within its feed.
The lacklustre results comes as the social media company struggles to maintain its edge with teens and younger users across both Facebook and the Instagram app.
That has threatened its ad-based business model and prompted chief executive Mark Zuckerberg to say last year that the company would be “retooling” its teams “to make serving young adults the north star”.