Meta missed $10 billion in advertising revenue in two quarters. The company's shares sank by 22%
Meta company reported for 2021. It seems that Apple’s new privacy policy has cost Facebook almost $10 billion in lost advertising revenue over the past two quarters. After the publication of the report, the company’s shares lost a lot in value.Analyst and marketing expert Eric Seufert drew attention to this.
He updated his Facebook data based on information from the latest financial report.
“It seems that the implementation of the ATT framework cost Facebook about $10 billion in advertising revenue compared to the estimated baseline for the last two quarters,” Seifert wrote. Separately, he stressed that other factors, including the pandemic and a general decline in growth rates, could have affected the lost revenue. In the table below, you can see the revenue needed to achieve the target growth rates last year. Thus, the lost revenues amounted to $4.397 billion and $5.292 billion for the third and fourth quarters of 2021, respectively.I updated my $FB model with today’s earnings data and it looks like ATT cost Facebook about $10BN in advertising revenue relative to presumed baseline over the past 2 quarters (caveat: COVID, slowing growth, etc.) pic.twitter.com/a37CWt056l
— Eric Seufert (@eric_seufert) February 2, 2022
Revenue for the fourth quarter (ended December 31) was $33.6 billion (an increase of 20% year—on-year), and annual revenue was $117.9 billion (an increase of 37%).
- Net profit for the fourth quarter reached $10.2 billion — a drop of 8% year-on-year.
- But the annual profit increased by 35% to $39.3 billion.The XR division of Reality Labs turned out to be the most unprofitable.
- In the fourth quarter, it earned $877 million with losses of $3.3 billion. Annual losses even exceeded $10 billion.The number of active monthly Facebook users has grown by only 4% over the year to 2.9 billion people.
- The annual growth of the social network’s DAU also turned out to be insignificant — 5% (up to 1.9 billion users).All these indicators were below analysts’ forecasts.
Because of this, Meta shares sank by almost 23% after the close of yesterday’s session. At the time of writing the news, trading on the stock exchange is still closed.
The company itself admits that it now faces many “macroeconomic challenges”, including inflation and changes in Apple’s privacy policy. This affects advertisers’ budgets. Meta also has to compete for users’ time with short video platforms.
