Meta Q4 Earnings: What Should Investors Expect?

With the world’s most popular social media platform set to report Q4 earnings next week, here’s what investors can expect

Jan. 28, 2022

Facebook rebranded itself as Meta (NASDAQ: FB) back in October. This wasn’t merely a cosmetic adjustment with a new logo but an earnest commitment to a new fully immersive social platform.

As a result of the rebrand, the company will start reporting on two segments. Facebook Reality Labs (FRL) will cover the metaverse, and Family of Apps will cover popular brands like Facebook, WhatsApp, and Instagram. $10 billion was already allocated to FRL in 2021 and that number is expected to reach $94 billion in 2022. 

Meta’s stock price is up 123% in the last five years but is down 13% this year as investors show signs of unease at the pivot. We examine what you can expect from Meta’s earnings report next week. 

Meta reports earnings for the fourth quarter of 2021 on Wednesday, February 2nd, at 5:00 pm Eastern Time.

To listen to the call and to access the transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to Meta’s Investor Relations Page.

Wall Street analysts monitoring Meta expect the company to post earnings of $3.84 on revenue of $33.4 billion. This would represent a 1% decrease and 19% increase, respectively, year-over-year (YoY). 

A key metric that investors will be listening for is the company’s average revenue per user (ARPU), which saw a quarterly decline of 1.2% last quarter but a YoY increase of 27%. This is no doubt the result of Apple’s privacy update to its OS which affects Meta’s targeted ads and investors will be hopeful that the drop-off remains low. 

In 2016, Meta (then Facebook) subsidiary Oculus, released its first consumer virtual reality (VR) headset. Fast forward to today and Meta wants to become the premiere VR platform with its ambitious FRL metaverse. Incidentally, the general metaverse is projected to be valued at nearly $800 billion by 2024 so it’s little wonder that the company is investing so heavily in developing the platform. 

To use a new VR headset (Oculus), you need a Facebook account and all standalone Oculus support will phase out by 2023. With nearly 3 billion global users, Meta should have little difficulty in scaling unit costs for the headsets to equip most of the world when it goes live with its metaverse in earnest. And although the impetus for creating a metaverse might have been the rise in Zoom calls during the pandemic, there are potential roadblocks.

First is competition from the likes of Microsoft, which just purchased Activision Blizzard. The company already had designs for its own metaverse and purchasing a huge gaming company only serves to further embolden the move. Next is the immersive quality of VR which opens the door to all sorts of bullying and abuse that will be experienced on a more personal level. Investors will be interested to hear comments on these issues.