Facebook daily users fall as Meta shares plummet 20%
By Jeph Ajobaju, Chief Copy Editor
Facebook daily active users (DAUs) have dropped for the first time since its founding in 2004 just as Meta its parent company posted a rare profit decline.
The loss in profit is driven by heavy spending on Meta’s vision for a “metaverse” in the face of advertising challenges on its existing services.
Meta, formerly known as Facebook, posted net income of nearly $10.3 billion in the final three months of last year (Q4 2021), an 8 per cent decline from Q4 2020 and below Wall Street analysts’ projections, according to CNN.
The BBC reports that Meta Networks says Facebook DAUs fell to 1.929 billion in Q4 2021), compared to 1.930 billion in Q3 2021.
It also warned of slowing revenue growth in the face of competition from rivals like TikTok and YouTube, while advertisers are also cutting spending.
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Shares slump
Meta’s shares slumped by more than 20 per cent in after-hours trading in New York.
The slide in Meta’s share price wiped around $200 billion (£147.5 billion) off its stock market value, reports the BBC.
Shares in other social media platforms, including Twitter, Snap and Pinterest, also fell sharply in extended trading.
Chief Executive Mark Zuckerberg said the firm’s sales growth had been hurt as audiences, especially younger users, had left for rivals.
Meta, which owns the world’s second biggest digital advertising platform after Google, also said it had been hit by privacy changes on Apple’s operating system.
The changes have made it harder for brands to target and measure their advertising on Facebook and Instagram and could have an impact “in the order of $10 billion” for this year, according to Meta’s chief financial officer Dave Wehner.
Revenue forecast
Meta’s total revenue, the bulk of which comes from advertising sales, rose to $33.67 billion in Q4 2021, narrowly beating market predictions.
It also forecast revenues of between $27 billion to $29 billion for Q1 2022, which is lower than analysts had expected.
The BBC stresses that while Meta has been making its own investments in video to compete with TikTok – owned by Chinese tech giant ByteDance – it makes less money from those offerings than its traditional Facebook and Instagram feeds.
Zuckerberg said he was confident the investments in video and virtual reality would pay off, as previous bets on mobile advertising and Instagram stories have.
But, he noted, the firm didn’t have to contend with a major rival during previous shifts in strategy.
“The teams are executing quite well and the product is growing very quickly,” he said. “The thing that is somewhat unique here is that TikTok is so big a competitor already and also continues to grow at quite a fast rate.”
Meta on the wane?
Facebook has always been a platform that grows, the BBC adds.
For every quarter in its existence the global numbers have been in one direction.
Yet in the last few years, growth has stalled in Europe and the US. That was masked by rises in users from the rest of the world.
Facebook just isn’t as popular with younger people as it was. By its own admission, TikTok is hurting business.
But there are other reasons too that investors are worried about Meta.
Meta changed its name because it wanted to focus on the Metaverse. But Meta is nowhere near building a Metaverse yet, it’s a pipe dream at the moment.
Instead it is pumping billions of dollars into trying to create one – all because Zuckerberg thinks there’s an appetite for it – a huge risk.
Perhaps the answer to Meta’s immediate problems would be to buy TikTok? Well US regulators would never allow that due to anti-competition laws.
And Facebook is now seen by many in Silicon Valley as a poisonous brand. It’s certainly not a cool place to work in the same way it was say ten years ago.
That makes attracting talent more difficult.
Meta has some serious problems going forward. This milestone could be just the beginning.