How Facebook's Stock is Faring as the Metaverse Takes Over

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


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