User experience

Showing a 404 page, next to the fact that this is not really friendly, generally means that your users end their navigation with the following consequences:

• the bounce rate increases
• the number of page views decreases.
• and if you are showing ads, your revenue will decrease because you can't show ads on a 404 page as it's a violation of ad policies. (Example with Google Ads)

Domain Authority

domain authority is a SEO metrics based on external backlinks. (A external backlink is a hyperlink from a website to your website).

When your page does not exist and returns a 404 response, this backlinks are not validated and your are losing authority.