<p><a href="http://dailywire.com/topic/stock-market" target="_blank" rel="noopener">Shares</a> of <a href="http://dailywire.com/topic/meta" target="_blank" rel="noopener">Meta</a> plunged nearly 24% on Thursday as the social media company severely missed quarterly earnings expectations amid criticism of bloated payrolls and distracted spending.</p>
<p>Revenues fell year-over-year from $29.0 billion to $27.7 billion, indicating a 4% decline, even as costs and expenses increased 19%, from $18.6 billion to $22.1 billion. Net income more than halved while earnings per share plummeted from $3.22 to $1.64.</p>
<p>&#8220;Our community continues to grow and I&#8217;m pleased with the strong engagement we&#8217;re seeing driven by progress on our discovery engine and products like Reels,&#8221; Meta CEO Mark Zuckerberg said in an <a href="https://investor.fb.com/investor-news/press-release-details/2022/Meta-Reports-Third-Quarter-2022-Results/default.aspx" target="_blank" rel="noopener">earnings report</a>. &#8220;While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth. We&#8217;re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company.&#8221;</p>
<p>Meta shares plummeted to $98.99 on Thursday, marking the company’s lowest stock price since 2016. Shares have fallen 70.8% since the beginning of the year, significantly trailing the Dow Jones Industrial Average and the technology-heavy NASDAQ, which have dropped 12.2% and 31.7%, respectively.</p>
<p>Much of the new spending comes from Reality Labs, the arm of the company charged with developing technologies related to the metaverse, an immersive virtual reality that Zuckerberg and other executives forecast will serve as the next phase of digital communication. The group saw a $9.4 billion loss in the first three quarters of the year. Meta changed its name from Facebook last year to reflect the new direction.</p>
<p>“Conversely, our growth in cost of revenue is expected to accelerate, driven by infrastructure-related expenses and, to a lesser extent, Reality Labs hardware costs driven by the launch of our next generation of our consumer Quest headset later next year,” Meta said in the earnings report. “We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.”</p>
<p>As the market reacted to the lowered earnings, Morgan Stanley downgraded the stock for the first time ever, according to a <a href="https://www.bloomberg.com/news/articles/2022-10-27/morgan-stanley-downgrades-meta-for-first-time-as-costs-soar" target="_blank" rel="noopener">report</a> from Bloomberg. Analysts expect that the company will see more poor results until “outsized investments” in metaverse technology begin to turn positive.</p>
<p>Altimeter Capital Management CEO Brad Gerstner had mentioned similar concerns in a recent <a href="https://www.dailywire.com/news/investor-tells-zuckerberg-to-cut-headcount-cool-down-metaverse-push-since-no-one-knows-what-it-even-means" target="_blank" rel="noopener">letter</a> to Zuckerberg about reversing the firm’s declining performance by reverting to core competencies. Rather than pouring between $10 billion and $15 billion into developing new metaverse technologies each year, Gerstner suggested slowing such expenditures to no more than $5 billion per year as investors focus on social media platforms and breakthroughs in artificial intelligence, which Meta will be “well positioned to help invent and monetize.”</p>
<p>Gerstner also mentioned that Meta had more than tripled its workforce from 25,000 people to 85,000 people over the past four years. “It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” he remarked. “I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion.”</p>

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Meta Shares Fall To Lowest Level Since 2016 As Company Burns Billions On Metaverse, Inflates Payrolls