Meta shares plunge 23% on downgrades, missed earnings and big spending on metaverse

Shares of Meta plunged 23% successful premarket trading connected Thursday arsenic investors and analysts digested the company's third-quarter net miss and a anemic fourth-quarter outlook.

The genitor institution of Facebook reported quarterly gross of $27.7 cardinal connected Wednesday, a diminution of much than 4% twelvemonth implicit twelvemonth and its second-straight quarterly decline. Its nett plummeted 52% to $4.4 billion.

Meta warned the 4th fourth would beryllium much of the same, issuing a weaker-than-expected outlook. It's expecting gross for the 4th fourth to beryllium $30 cardinal to $32.5 billion. Analysts were expecting income of $32.2 billion.

Meta CEO Mark Zuckerberg reiterated his committedness to spending billions of dollars processing the metaverse. Meta's Reality Labs unit, which is liable for processing the virtual world and related augmented world exertion that underpins its plans for the metaverse, has mislaid $9.4 cardinal truthful acold this year.

Morgan Stanley downgraded the stock connected Thursday, citing higher spending. Analyst Brian Nowak slashed his terms people to $105 from $205. He expects the company's issues to persist arsenic Meta continues to summation spending to physique retired its AI capabilities.

Cowen's John Blackledge also downgraded Meta to marketplace execute from outperform, and lowered his terms people to $135 from $205 prior, citing the higher opex and capex trajectory. KeyBanc's Justin Patterson lowered his standing connected the banal to assemblage value from overweight, besides citing the rising costs.

Since the commencement of the year, Meta shares are down by much than 61%. It's been wounded by contention from rivals similar TikTok, positive a wide slowdown successful online advertisement spending and challenges from Apple's iOS privateness update.

—CNBC's Michael Bloom contributed to this report.