Shares of Facebook parent company, Meta Platforms (FB  ) closed 26% lower following the company's Q4 earnings report which disappointed in terms of revenue guidance for the upcoming year and also projected higher than expected costs for the company's transition to the metaverse.

The company is also losing in terms of relevance and growth to ByteDance's TikTok which is the clear leader in the short-form video category. Instagram's Reels has gained some traction but is barely impactful in terms of overall revenue. Further, the changes in Apple's (AAPL  ) ad-tracking system has certainly dented Facebook's ability to monetize its content.

Overall, Facebook lost more than $200 billion in market cap which is an all-time record, and the stock is now well below the trillion-dollar threshold. In total, the stock is off 37% from its highs in early November.

Inside the Numbers

In Q4, Facebook reported earnings per share of $3.67 below expectations of $3.84 per share. Revenue came in at $33.67 billion, slightly beating estimates of $33.4 billion.

Daily Active Users also missed estimates at 1.93 billion vs 1.95 billion expected. Similarly, monthly active users missed at 2.91 billion vs 2.95 billion. However, average revenue per user beat expectations at $11.57 vs $11.38.

Another reason for the stock's big sell-off in addition to these misses was the company's disappointing guidance for Q1. It also marked the company's first quarterly decline in daily active users.

In Q1, Facebook expects between $27 billion and $29 billion in revenue which is below analysts' estimates of $30.15 billion in revenue which implies growth between 3% and 11%.

The company attributed its weakness due to privacy changes to Apple's iOS and inflation and supply chain issues that are impacting advertisers' budgets. The company's newest growth initiative - Reels - is also failing to generate as much revenue as Instagram or its news feed.

Investors are also concerned about the company's plans to increase spending for the metaverse. The company's metaverse division generated $877 million in revenue and had an operating loss of $3.3 billion.

Overall, Facebook shares are now quite cheap with a forward P/E of 17. However, it doesn't mean that shares are necessarily a buy especially if the company's revenues and earnings are going to decelerate. Its core business is losing market share, while its new initiative is likely to lose money for many years.