Facebook recently changed its name to Metaverse. Though the name change was expected, it did bring some element of surprise. Here we have a look at how Facebook's stock is faring as the Metaverse takes over.
The Rise
The third-quarter
earnings call of the company was posted on October 25. The revenue of the brand
rose 35% on a year-over-year basis and reached US$ 29.01 billion, but it failed
to reach the estimates by US$ 510 million. Interestingly, the earnings of the
company increased by 19% to get to US$ 3.22 per share, which certainly beat
expectations.
After the
report, the stock of Facebook rose slightly, and it is now higher by up to 20%
for this year.
The
Previous Challenges
Facebook
has dealt with other challenges in the past too. Last quarter, the social media
giant warned that the latest iOS update from Apple, allowing users to opt-out
of data tracking features across all the apps, might harm the ad revenue growth
in the second half of the year. Even though it was a huge challenge, Facebook
managed to grow the ad revenue 33% year-over-year. It was on top of the
segment's 22% growth that had happened a year earlier.
Another
challenge faced by the brand was intense competition from ByteDance's TikTok
and Apple's iMessage. The "others" revenue of the company increased by 195% as
the brand sold Portal smart screens and Oculus Quest headsets.
Facebook is
expecting the revenue to rise 12% to 21% year-over-year in the fourth quarter.
If that happens, it will be the slowest growth in over a year.
The CFO of
Facebook, Dave Wehner, blames the slowdown on "significant uncertainty we
face in the fourth quarter in light of continued headwinds from Apple's iOS 14
changes and macroeconomic- and COVID-related factors." He also expects the
"others" segment to face a tough year-over-year comparison primarily
due to the launch of the Quest 2 headset that happened at the end of 2020.
Facebook
Still Connects
Facebook is
gaining more customers with time. The monthly active people across Facebook,
Instagram, Messenger, and WhatsApp have increased 12% year over year and have
reached 3.58 billion. The family average revenue per person has also grown 21%
to reach US$ 8.18.
The
Focus on Metaverse
Even before
the name change was announced, Facebook has been focused on expanding the
metaverse business by launching VR headsets, experiences, and plans to launch
AR devices. It will start sharing the financials for Facebook Reality lab from
the fourth quarter so that investors know that the company isn't just focused
on targeted ads.
The company
has also come up with a stock buyback plan for which it has set aside US$ 50
billion. It had US$ 8 billion at the end of September.
Should
You Buy Facebook's Stock or Invest in Meta Platforms Inc.?
If you want
to invest in a stable company that can deal with many challenges, including a
name change, you can invest in Meta Platforms Inc. However, there are better
stocks available that will give better returns.
Check out
the latest performance of the stock here.
Here's a Beginner's Guide to Buying
Facebook (Meta) Stock
by Shruti , BNS Business News
Source:
https://www.fool.com/investing/2021/10/29/is-facebook-stock-a-buy/