Why did Meta Platforms stock plunge today? Weak earnings, guidance to blame
Meta Platforms (NASDAQ:FB) shares plunged on Thursday, losing more than 25% of their value after the Mark Zuckerberg-led company posted earnings and guidance that fell well short of Wall Street expectations.
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 such users during the quarter. 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.
At last check, Meta shares were down nearly 27% to $236.88 as more than 165 million shares changed hands, more than eight times the average daily volume. Meta lost more than $200 billion in market capitalization, which would be among the largest declines in stock market history.
Meta's (FB) outlook also gave investors and analysts pause. For the first quarter of this year, the company expects revenue should be between $27 billion and $29 billion, which would represent just 3% to 11% growth, compared to consensus estimates of $30.27 billion.
UBS analyst Lloyd 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).