Gene Munster breaks down Facebook earnings

Loup Ventures' Gene Munster breaks down Facebook earnings and says the metaverse will not be as big as the internet. With CNBC's Melissa Lee and the Fast Money traders, Guy Adami, Tim Seymour, Dan Nathan and Jeff Mills. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Facebook investors shrugged off the massive ongoing document dump on Monday and instead focused on the company’s third-quarter earnings, which topped analysts’ estimates.

The company said it’s adding $50 billion to its stock buyback program, helping lift the shares about 2% in extended trading.

Here are the results.

Earnings: $3.22 vs. $3.19 per share expected by analysts, according to Refinitiv.
Revenue: $29.01 billion vs. $29.57 billion expected by analysts, according to Refinitiv.
Daily active users (DAUs): 1.93 billion vs. 1.93 billion expected by analysts, according to StreetAccount.
Monthly active users (MAUs): 2.91 billion vs. 2.93 billion expected by analysts, according to StreetAccount.
Average revenue per user (ARPU): $10.00 vs. $10.15 expected by analysts, according to StreetAccount.
Facebook will make significant changes in the next year to focus more on its full-screen video Reels feature, which competes directly with TikTok, CEO Mark Zuckerberg told analysts on the earnings call. It’s part of an effort to make Facebook and Instagram more appealing to users between the ages of 18 and 29.

“Over the last decade as the audience that uses our apps has expanded so much and we focus on serving everyone, our services have gotten dialed to be the best for the most people who use them rather than specifically for young adults,” Zuckerberg said.

He warned that “this shift will take years, not months, to fully execute” and that ultimately it will be as significant to Facebook as the adoption of the News Feed and Stories features.

“Reels has the potential to be something of that scale,” he said.

Zuckerberg kicked off the earnings call with a vehement defense of his company, following an onslaught of reports that stemmed from documents leaked by Frances Haugen, a whistleblower and former employee.

The internal company documents released by Haugen showed that the number of teenage users of the Facebook app in the U.S. has declined by 13% since 2019, with a projected drop of 45% over the next two years. The number of users between the ages of 20 and 30 was expected to decline by 4% during that time frame, the documents showed.

Haugen initially shared documents with The Wall Street Journal, which published a series of news stories based on them. She appeared before a Senate panel earlier this month to testify about her experiences at the company. Since then, Haugen has released documents to several more news outlets, leading to additional news stories.

The reports show that Facebook is aware of many of the harms its apps and services cause, particularly to teenage girls, but either doesn’t rectify the issues or struggles to address them. More documents are expected to be shared daily over the coming weeks.

Zuckerberg rebutted the claims and referred to the latest news cycle as “a coordinated effort to selectively use leaked documents to paint a false picture of our company.”

He touted Facebook’s investments in research and said the rest of the industry should follow its lead.

“The reality is social media is not the main driver of these issues and probably can’t fix them by itself either,” Zuckerberg said. “We should want every other company in our industry to make the investments and achieve the results that we have.”

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