The company, formerly known as Facebook, posted net income of nearly $10.3 billion in the final three months of last year, a decline 8% from the same period in the prior year and below Wall Street analysts’ projections.
Meta’s shares plunged as much as 22% in after-hours trading following the report.
“Investors will look at these numbers closely as a first indicator of how far off the Metaverse is from being a profitable reality,” Tom Johnson, global chief digital officer at media agency Mindshare Worldwide, said in emailed commentary.
Meta also reported slowing growth in its core advertising business, which still makes up around 99.5% of its total revenue. Advertising revenue grew 20% year-over-year — its slowest growth rate for the year — to $32.6 billion, as the iOS changes made targeted advertising more difficult. The company also failed to grow its daily or monthly active user bases on Facebook from the third quarter, an usual miss for the company.
The company also shared a rough forecast for the upcoming quarter, saying it expects revenue to grow only between 3% and 11% due to “headwinds to both impression and price growth” in its advertising business. It added that its platforms face increased competition for people’s time, and that users have shifted toward engaging more with video products like Instagram Reels, which are harder to monetize.