Meta investors brace for a difficult quarter after stocks nosedive

theguardian.com:

Meta experienced a historic nosedive in value earlier this year amid a major rebrand and shake-ups to its business model – and investors are bracing for another difficult quarter.

Meta lost a record $230bn in market value after a disappointing earnings report in February, in which it revealed Facebook had recorded its first-ever drop in daily user numbers.

While investors will be eagerly watching Meta’s first quarter report on Wednesday for signs of recovery, a “full turnaround is not expected”, said Debra Williamson, principal analyst at market research firm Insider Intelligence.

“It is going to be slow progress for Meta after its massive stock decline last quarter,” she said. “But we – and advertisers in particular – are hoping to see some progress.”

Meta’s struggle was not completely unexpected: chief executive officer Mark Zuckerberg had warned that new privacy rules from Apple could cost the company $10bn in lost sales this year. The regulations prevent Meta from collecting certain user data and have prompted the company to shift some of its core advertising business models.

One such shift is placing substantial emphasis on Reels, its shortform video content that it has yet struggled to monetize. The company warned in last quarter’s report that year-over-year growth could continue to be affected in the first quarter of 2022 by these issues.

“We expect continued headwinds from both increased competition for people’s time and a shift of engagement within our apps towards video surfaces like Reels, which monetize at lower rates than Feed and Stories,” said the CFO, David Wehner, in a guidance statement.

Meta’s pivot to video represents an effort to retain young users – a key advertising demographic that has been leaving