Meta Stock Plunges After a Dismal Earnings Report

Meta's third-quarter earnings call Wednesday did not have great news for investors: For the second consecutive quarter, revenue declined, and it's forecasted to do so again next quarter. Meanwhile, costs and expenses rose 19% year over year. Shares plummeted in extended trading after the call, continuing what CNBC calls a "freefall" this year for stock in the company formerly known as Facebook. The news resulted in quite a few headlines like Zev Fima's for CNBC's Investing Club: "Metaverse-obsessed Mark Zuckerberg refuses to cut costs. It's no wonder the stock tanked." (Article is behind a paywall.) More reaction:

• At Intelligencer, John Herrman puts it like so: "It’s Official: Meta Is a Disaster." Facebook stock peaked above $353 in September 2021, the month prior to it morphing into Meta and cementing its shift into the metaverse. Since then, the stock's value has been cut in half. The Q3 earnings report showed other "shocking" numbers, like a 52% plunge in net income year over year. The problem? Reality Labs, where most of Meta's virtual reality and metaverse ventures reside, has lost more than $9 billion so far this year, and yet CEO Mark Zuckerberg remains committed to it because he considers it "the next big thing." Zuckerberg's argument is that Facebook is still making enough money to cover those losses until we actually arrive at the next big thing, but Facebook isn't doing so hot, either, Herrman writes. Full column here.

• Zuck's take, which he offered on the call: "I get that a lot of people might disagree with this investment, but ... I think it would be a mistake not to focus on any of these areas which I think are going to be fundamentally important to the future," he said, adding that "people are going to look back decades from now" and see how important and "historic" the metaverse project was, per Business Insider.
• Alex Heath responds to that at the Verge: "The problem is that a decade is a long time from now. And as Zuckerberg experienced on today’s earnings call, he is losing faithful supporters quickly." Full column here.
• In an open letter to Zuckerberg posted Monday, an investor (Brad Gerstner, CEO of Altimeter Capital) strongly encouraged Meta to reduce its investment in the metaverse and return the focus to its core business: "Meta’s core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone."

(More Facebook stories.)