FOR the first time in Facebook’s 18-year history, the number of daily active users (DAUs) has decreased.
According to Facebook’s parent company Meta Networks, DAUs declined to 1.929 billion in the three months to the end of December, down from 1.930 billion the previous quarter.
In addition, the company cautioned that revenue growth would slow due to competition from rivals such as TikTok and YouTube, as well as advertisers cutting back on spending.
In New York after-hours trade, Meta’s shares fell by more than 20%.
The fall in Meta’s share price took out more than $200 billion (£147.5 billion) from the company’s market value.
Other social media platforms, such as Twitter, Snap, and Pinterest, saw their share prices plummet in extended trading.
However, the company’s sales growth has been hampered, according to CEO Mark Zuckerberg, as audiences, particularly younger users, have defected to competitors.
Meta, which operates the world’s second-largest digital advertising platform after Google, revealed it was also impacted by Apple’s operating system’s privacy modifications.
According to Meta’s chief financial officer Dave Wehner, the changes have made it more difficult for brands to target and measure their advertising on Facebook and Instagram, and might cost them “in the order of $10 billion” this year.
In the time, Meta’s overall revenue, which is primarily made up of advertising sales, increased to $33.67 billion, narrowly exceeding market expectations.
It also predicted sales of $27 billion to $29 billion for the coming quarter, which is lower than experts had expected.
While the company has been making its own video investments to compete with TikTok, which is controlled by Chinese tech giant ByteDance, the company makes less money from these products than it does from its standard Facebook and Instagram feeds.
Mr. Zuckerberg expressed confidence that the investments in video and virtual reality, like past bets on mobile advertising and Instagram stories, would pay off.
However, he pointed out that throughout previous strategy shifts, the company didn’t have to compete with a major competitor.
“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.”
Facebook has always been a growing platform.
The global figures have been in one direction for every quarter of its existence.
However, growth in Europe and the United States has slowed in recent years. This was obscured by an increase in users from other countries.
Facebook isn’t as popular with young people as it once was. TikTok, by its own admission, is hurting its company.
Investors are concerned about Meta for a variety of reasons.
Because it wished to focus on the Metaverse, Meta changed its name. But Meta isn’t even close to creating a Metaverse; it’s still a pipe dream.
Instead, it’s pouring billions of dollars into trying to build one, all because Mark Zuckerberg believes there’s a market for it – a huge risk.
Is it possible that purchasing TikTok would solve Meta’s immediate problems? Because of anti-competition regulations, US officials would never allow it.
And many in Silicon Valley now regard Facebook as a poisonous brand. It’s not the same kind of cool place to work as it was, say, ten years ago. It is becoming increasingly difficult to attract talent as a result of this.
Meta is going to have some big issues in the future and this hurdle might just be the beginning.
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