On February 3, Beijing time, the three major U.S. stock indexes collectively closed up, out of the "four consecutive yangs", the S&P 500 index rose 0.94%, the Dow rose 0.63%, nasdaq rose 0.5%.
From the perspective of industry concepts, Internet content and information, industrial REITs, cloud computing, semiconductors and other sectors rose in the front, and concepts such as gene editing, quantum computing, and lidar fell in the front.
However, the after-hours META (formerly Facebook) earnings report has once again cast a shadow over technology stocks.
User growth has stagnated
The market capitalization evaporated by more than 1.3 trillion yuan
After hours on Wednesday (February 2), social media and digital advertising giant Facebook, whichse strategic focus has shifted to "meta-universe first", announced its fourth quarterly financial report for fiscal 2021, which is also the first quarterly financial report since it renamed its parent company Meta Platforms in October last year.
Meta Platforms revenue was $33.67 billion in the fourth quarter of last year, slightly higher than analysts' expectations of $33.43 billion, but earnings per share EPS were $3.67, which was lower than expected at $3.84. Net income of $10,285 million was the first time since the second fiscal quarter of 2019 that the company experienced a year-over-year decline in profit (-8%). In the fourth quarter, the number of daily active users was 1.93 billion, which was lower than analysts' expectations of 1.95 billion; the number of monthly active users was 2.91 billion, which was lower than the 2.95 billion expected by analysts. This also means that the company's daily active data has declined for the first time from the previous month.
The company expects current quarterly revenue to be between $27 billion and $29 billion, compared to analysts' estimates of $30.25 billion.
The company's CFO David Wehner also gave a series of growth pressures that are currently being faced in the earnings report. Wehner revealed that competition among content platforms for consumer usage time is intensifying. Even in the company's internal product line, consumer stickiness tends to shift to video interfaces like Reels, but the currency conversion rate of this feature is lower than that of traditional text services such as information flow.
In addition, META also expects that Apple's iOS system rules changes and regulatory changes will continue to have a negative impact on the targeted advertising business, while inflation and supply chain issues in the real economy will also affect advertisers' budgets. In addition, in the Fed's interest rate hike cycle, foreign exchange (the appreciation of the us dollar against other currencies) will also become a negative factor for the company's revenue growth.
Meta Platforms Inc., Facebook's parent company, stalled fourth-quarter user growth and a disappointing outlook for the quarter, raising concerns about the company's future growth prospects, which may ultimately struggle to justify expensive bets on metaversity, CEO Zuckerberg's vision of an immersive internet.
Zuckerberg Image source: Visual China
As of press time, META's after-hours stock price fell to $250.24, a 22.89% plunge, and the market value evaporated by $208.46 billion (about 1.33 trillion yuan).
Image source: Oriental Fortune
On Feb. 3, META CEO Zuckerberg said plans to launch a mobile version of the virtual reality experience "Horizon World" this year; the impact of iOS will continue into 2022, with the company focusing on video content and attracting young people; and more than 150 million users worldwide browsing the business directory on whatsapp every month. He also said that with the development of the metaverse, business faces short-term challenges, and it will take time to fully realize this vision.
In addition, the "meta-universe company" Meta Platform analyst conference call said that artificial intelligence will play a major role in the company's process of creating a "meta-universe". Given TikTok's popularity with consumers, the company will focus on Instgram's Reels brand.
The net loss of the "Meta-Universe" business exceeded $10 billion
Apple's privacy policy was changed to a challenge
Meta's new earnings structure consists of two parts, one is the "app family" that includes Facebook, Instagram, Messenger, WhatsApp and other services, and the second is FRL (Reality Labs), which includes hardware, software and content related to AR (augmented reality) and VR (virtual reality).
This is the first time Meta has disclosed financial data for the FRL division, which includes the Metacostem Strategy, and the company expects the investment in Metacosm to reduce operating profit by about $10 billion in 2021, and FRL will not be profitable in the short term. In CEO Zuckerberg's vision of the metacosmology last July, he hoped to turn Facebook into a metacosmite company in about five years, and billions of dollars of multi-year investment would eat into profits.
Reality Labs, which covers the AR/VR business, grossed $877 million in revenue in the fourth quarter of last year, but also lost $3.304 billion, clearly showing that the business is still in the cash-burning phase and that the losses of the business have been expanding over the past year. Looking at the full year's performance, Zuckerberg's "meta-universe business" achieved revenue of $2.27 billion in 2021, with a net loss of $10.19 billion (about 64.2 billion yuan), and the business lost $4.5 billion and $6.62 billion in 2019 and 2020, respectively.
According to Wall Street, since Meta issued the Metacosmum Declaration, there have been 224 earnings calls from U.S. companies in 2021 that mention the word "metacosmity", compared with only 7 times in 2020, showing the popularity of metacosmity as the next mainstream concept after the mobile Internet. But Kim Forrest, chief investment officer at Bokeh Capital, warned that Meta is expected to invest heavily in the meta-universe, but that the first movers cannot guarantee success.
Global X research analyst Pedro Palandrani also called the metacosm is a "long-term story", and in the short term investors are more concerned about how Meta can navigate Apple's privacy changes, e-commerce business breakthroughs, and ways to monetize Messenger or the short video Reels feature.
The analysis generally pointed out that although Meta said it would invest billions of dollars to build a meta-universe virtual world, for now, its Facebook and Instagram apps and core advertising revenue, which accounts for the absolute majority of revenue, are still the focus of investors' attention.
Meta has the second largest digital advertising platform in the world after Google. Last year's third quarter, the company warned that it faced a continuous crackdown on Apple's operating system privacy changes, the macro economy and the epidemic in the fourth quarter, and "major uncertainties."
Daniel Newman, principal analyst at Digital Technology-focused Futurum Research, pointed out that it is important to pay attention to the sensitivity of the advertising business to price increases, how robust is Facebook in the high inflation environment, and can it continue to raise prices if the economy slows?
Evercore ISI analyst Mark Mahaney also believes that Apple's privacy changes clearly had a negative impact on Facebook in the third quarter, and the key question is whether the latter can further reduce this risk, or whether the negative impact has expanded.
Regulatory pressure is also a challenge THAT META must face after it was ordered by UK regulators to sell social media animation image company Giphy.
Google's market capitalization is approaching $2 trillion
Popular Chinese stocks fell
On February 3, Beijing time, the US technology rose and fell, of which Apple rose 0.70%, Tesla fell 2.75%, Amazon fell 0.38%, Google A rose 7.52%, Netflix fell 6.05%, Microsoft rose 1.52%, Qualcomm rose 6.25%, AMD rose 5.12%, and Nvidia rose 2.45%.
With tech giant Alphabet (Google's parent company) reporting more than expected, and a 20-1 stock split plan that makes the company's stock easier to hold by individual investors, Google A shares rose 7.52% to $2,960 on February 3, with a market capitalization of $1.96 trillion, near a record high last November. In addition, some market participants have interpreted that cheaper stock prices also make It more likely that Google will be included in the Dow.
In addition, Chinese stocks performed poorly, with well-known Internet companies such as Alibaba, JD.com, Bilibili, Futu Holdings and Pinduoduo falling at least 2%.
Among them, Alibaba's stock price closed at $122.79, down 3.48%; JD.com's stock price closed at $73.21, down 2.49%; Bilibili's stock price closed at $33.69, down 6.13%; Pinduoduo's stock price closed at $57.79, down 3.04%...
(This article does not constitute investment advice, and you do so at your own risk)
Edited | Duan Lian Du Hengfeng
Proofreading | Wang Yuelong
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