Facebook's daily active users fell short of analyst expectations. Meta Platforms Inc. has dropped more than 25% after it released a disappointing earnings report on Wednesday.

Feb 3

Meta stock fell in extended trading on Wednesday after Facebook owner Meta Platforms released its fourth-quarter earnings report, sending the company's stock down 23% in after-hours trading Wednesday and nearly 20 percent in Thursday's premarket. It was the first set of quarterly results for Facebook's parent company, Meta, under its new name.

Earnings per share fell 5% year on year to $3.6, falling short of forecasts of $3.8.

The stock is on track for its biggest one-day drop ever, surpassing the 19% drop it experienced in July 2018.The loss on Thursday is expected to reduce its market capitalization by roughly $210 billion, lowering it to around $689 billion.

Facebook is investing more aggressively in products that make less income in the immediate term but have high growth potential, such as Reels on Instagram. The company's primary social media business, reported under its family of apps, generated $32.79 billion in sales and $15.89 billion in operating profits in the quarter.

However, it should be noted that overall income increased in the three months to December, rising to $33.7 billion from $28.1 billion at the same time last year. Net income was $10.3 billion for the quarter, down roughly $1 billion from the previous year. Despite this, Meta is a highly wealthy and lucrative company.

Facebook's daily active users fell short of analyst expectations, totaling 1.929 billion in the three months to the end of December, compared to 1.84 billion in the same period last year. They were down from 1.93 billion in the prior quarter. It saw its first drop in daily active users since the company's inception in 2004. A reduction in the number of individuals who check in to Facebook every day indicates that the company's core product has achieved saturation in global markets, meaning that it may no longer be able to grow its user base.