November 27, 2022

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Dead sink in Wall Street, you lose 80 billion. Also amazon – economy

Mark Zuckerberg asks for “patience” but Wall Street turns its back on him. Faced with a quarterly report with profits halved and revenue falling, Meta shares tumbled, losing 25% and burning $80 billion in one session. A jingle added to the 61% crash since the start of the year, as the giant saw market capitalization rise by more than 660 billion as it fell behind the twenty largest US companies. Meta’s third-quarter net profit fell 52% to 4.4 billion, below analyst expectations. Revenue fell 4% to €27.71 billion, the slowest rate since its stock market plunge in 2012. For the current quarter, the company estimates revenue from €30 to €32 billion, while total expenses should be reached for 2022. Between 85 and 87 billion, to then rise to 96-101 billion next year. Figures frighten investors, especially in light of slowing growth. Zuckerberg admits Meta faces “short-term revenue challenges” but “the fundamentals are there to return to stronger growth. I appreciate patience and believe those who are patient and invest in us will eventually be rewarded.” So the CEO does not abandon Metaverse, but on the contrary doubles his bet: “We are doing something that will be of historical importance.” However, his words are not enough to reassure in the face of increasingly fierce competition, especially from TikTok. Meta’s disappointing results come in the midst of a wave of tech sales, the results of which are still disappointing. Having been the protagonist during the pandemic, big tech companies are feeling the effects of inflation and rising interest rates, and are pointing to a tough period on the horizon with quarterly reports. Indeed, Silicon Valley is dealing with the same problems as the rest of the economy: Driven by consumer spending during the emergency, Covid invested heavily to keep up with demand, and now that spending has slowed, it is having a hard time adjusting to the new reality. However, the slowdown of the big tech companies points to weaknesses that are not only related to the economic situation. Despite the billions invested, the giants have yet to find a new profitable idea, as some observers highlight: Meta and Google continue to rely on advertising sales, just as the iPhone continues to be Apple’s growth engine. Zuckerberg’s bet on the metaverse has yet to pay off and it will take, as the CEO initially admitted, some time before we see results. How long it takes is not clear and that is exactly what makes investors nervous. Early indications point to a long way to go. According to rumors reported by the Wall Street Journal Horizon, the Meta metaverse is not taking off as expected. The company initially set a target of 500,000 active users for Horizon Worlds by the end of the year, but the goal has recently been lowered to 280,000. At the moment, the newspaper continues, the number of users is about 200,000 per month and many visitors generally do not return to the application after the first month. A disturbing cross-section for investors for whom it is not clear how much patience they will have to see tangible results.

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Amazon ended the third quarter with revenue down 15% to $127.1 billion, less than analysts’ expectations. For the last three months of the year, it expects revenue of 140.0-148.0 billion, below market expectations that were betting on 155.2 billion. Net income fell to 2.9 billion, or 28 cents a share, better than the 22 cents analysts had expected. Disappointing sales estimates for the current quarter are plunging Amazon shares to Wall Street, as after-hours trading loses as much as 21%.