Facebook's Meta sees market cap drop by $200B as sales, outlook fail to please Wall Street
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Facebook parent company Meta Platforms (NASDAQ:FB) found itself on weaker footing on Wall Street, Thursday, as investors sliced more than $200 billion off the social-media giant's market cap following its disappointing quarterly report and outlook.
Meta's (FB) shares plunged by more than 23% in pre-market trading in the wake of the company's fourth-quarter results that suggested more weakness ahead in the social-media sector. After U.S. stock markets closed Wednesday, Meta (FB) said it earned $3.67 a share, on $33.67 billion in the fourth quarter of 2021, while Wall Street analysts had forecast the company to earn $3.83 per share on $33.44 billion in revenue.
Key user figures also fell short, as daily active users came in at 1.93 billion, up 5% from a year ago, but below estimates of 1.95 billion. Daily active users also fell from the third quarter, the first such decline on record.
Monthly active users of 2.91 billion, which rose 4%, also came in short of expectations for 2.95 billion.
Meta's (FB) outlook also gave investors and analysts pause. For the first quarter of this year, the company forecast revenue of $27 billion to $29 billion, which would represent just 3% to 11% growth, compared to consensus estimates of $30.27 billion.
UBS analyst Llyod Walmsley slashed his price target to $280 a share from $400, noting that the weak first-quarter outlook and increased chatter around TikTok, owned by China's ByteDance (BDNCE), are concerning. 
"Never has Meta gone up against a [more than 1 billion] user platform significantly ahead of them in an engaging new format," Walmsley said, in a research note. Walmsley added that Meta's slowing revenue growth, along with "a fierce TikTok battle", is likely to weigh on Meta's shares over the near term and that TikTok's revenue from ads outside of China has room to scale higher than its own rivals.
"The revenue pain is yet to come," said Walmsley, who also left his buy rating on Meta's (FB) stock unchanged.
Goldman Sachs analyst Eric Sheridan also slashed his price target, lowering it to $355 a share from $445. Sheridan said that headwinds are likely to persist for some time, comparing the situation to what Facebook experienced in during summer 2018.
Sheridan said that Meta's (FB) operating report "quickly reminded investors of the mixture of platform transition, operating margin reset and pronounced downward stock price volatility that was encountered in summer 2018. Sheridan also added that Apple's (NASDAQ:AAPL) privacy changes, competition, the regulatory environment and a maturing business are likely to stay as headwinds for the stock. 
Last month, the European Union approved Meta Platform's (FB) acquisition of Kustomer, a customer-service startup that competes with the likes of Zendesk (NYSE:ZEN).