Facebook warned that Apple Inc’s new privacy rules would weigh on its digital business in the current quarter, after the social media company reported quarterly revenue below market expectations.
Chief Financial Officer David Wehner said Facebook expected its investment in FLR to reduce its overall operating profit in 2021 by approximately $10 billion.
The financial commitment by the world’s largest social media company to building the metaverse comes as the company is swamped by coverage of documents leaked by former Facebook employee Frances Haugen which she said showed the company chose profit over user safety.
Facebook has said Haugen mischaracterized its work.
Shares of the company were trading up about 2% at $336 in volatile extended trading on Monday. Facebook, whose shares have gained about 20% so far this year, is about $85 billion away from regaining a spot on the $1 trillion club and joining new entrant Tesla Inc.
Facebook said that starting in the fourth quarter of 2021, it would break out Facebook Reality Labs (FRL), the part of its business that works on augmented and virtual reality, as a separate reporting segment from its family of apps.
The company expects fourth-quarter revenue to be in a range of $31.5 billion to $34 billion. Analysts had forecast $34.84 billion in revenue, or a 24.1% jump, according to IBES data from Refinitiv.
Its third-quarter revenue too faced the brunt of Apple’s privacy rules that made it harder for brands to target and measure their ads on Facebook.
The company’s total revenue, which primarily consists of ad sales, rose to $29.01 billion in the third quarter from $21.47 billion a year earlier, missing analysts’ estimates of $29.57 billion.
Facebook said it repurchased $14.37 billion in stock during the third quarter and announced an additional $50 billion in share buybacks.
Reporting by Elizabeth Cullerton in New York and Nivedita Balu in BengaluruEditing by Arun Koyyur and Matthew Lewis
