Meta’s stock dropped 23% in premarket trading today following yesterday’s Q3 earnings report.
Facebook’s parent company not only reported its second consecutive revenue decline — down 4% versus Q3 2022, to $27.7 billion; its net income plummeted 52%, to $4.4 billion.
The company said it expects another revenue decline in Q4, projecting between $30 billion and $32.5 billion, whereas analysts expected at least $32.2 billion.
Meta’s expenses increased 19% YoY, to $22 billion, and its operating income dropped 46%, to $5.7 billion.
Further, CEO Mark Zuckerberg confirmed the company’s intention to increase its spending on developing metaverse platforms and devices — even as Meta reported that its metaverse-focused Reality Labs unit lost $9.4 billion year to date as of the third quarter.
Meta said that it expects Reality Labs’ operating loss will “grow significantly” year-over-year in 2023, after which “we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.”
Morgan Stanley, KeyBanc and Cowen all downgraded Meta on the report, specifically citing concerns about increased spending.