Bad news for Facebook, one of today’s most used social media platforms: Although it has been observed for years that the company has fallen out of favor with other social media platforms, an unprecedented situation has occurred in Facebook’s 18-year history. According to the company’s statement, the number of daily active users fell for the first time. One of the rivals that led to Facebook’s downfall is TikTok…
Facebook’s parent company, Meta Networks, announced that the number of daily users dropped to 1 billion 929 million in the three months to the end of December. For the previous quarter of 2021, this number was 1 billion 930 million.
Advertisers on the company’s platform, who warn that revenue growth is slowing down in the face of competition from TikTok and YouTube, are also reducing their spending.
Meta’s CEO, Mark Zuckerberg, said that the company’s sales growth has slowed as its target audiences, especially young users, are turning to their competitors.
Meta, which owns the world’s second largest digital advertising platform after Google, said that it was also affected by Apple’s privacy-related changes in its operating system.
EXCHANGE VALUE FINISHED 200 BILLION DOLLARS
According to Dave Wehner, Meta’s CFO, the changes have made it harder for brands to target and measure their ads on Facebook and Instagram. This could have an impact of “around $10 billion” in 2022.
After these statements, Meta’s shares lost more than 20 percent in trading after the stock market closed in New York.
The drop in Meta’s share price resulted in the company’s meltdown of nearly $200 billion from its stock market value.
Shares on other social media platforms, including Twitter, Snap and Pinterest, also fell sharply in long-term trading.
Meta’s total revenue, mostly from ad sales, rose to $33.67 billion during this period, narrowly exceeding market forecasts.
Sharing its revenue expectation for the next quarter, the company predicts revenue of 27 billion to 29 billion dollars. This is lower than analysts expected.
The company is investing in the video space to compete with TikTok, owned by Chinese technology giant ByteDance. However, the return on these investments is not as high as Facebook and Instagram.
By contrast, Zuckerberg said he is confident investments in video and virtual reality will pay off, as have previous investments in mobile advertising and Instagram stories.
However, he noted that the firm did not have to contend with a major competitor during previous strategy changes.
“Teams are performing quite well and the product is growing very fast,” Zuckerberg said.
“What’s different here is that TikTok is already a huge competitor and continues to grow at a pretty rapid rate.”
ANALYSIS OF BBC NORTH AMERICA TECHNOLOGY REPORTER JAMES CLAYTON
Facebook has always been a growing platform.
The global numbers it announced for each quarter in its history have only increased.
But in the last few years, growth has stalled in Europe and the USA. This was offset by increases in user numbers in other parts of the world.
Facebook is not as popular among young people as it used to be. As he admits, TikTok competition is hurting their revenue.
But there are other reasons why investors should be worried about the Meta.
Meta changed its name because it wanted to focus on the Metaverse. But Meta isn’t even close to building a Metaverse yet, so right now it’s a pipe dream.
The company is spending billions of dollars trying to build a Metaverse because Mark Zuckerberg thinks there will be demand for it, which is a big risk.
Could the answer to Meta’s primary problems be to buy TikTok? Regulators in the US would never allow this due to anti-competition laws.
And Facebook is now viewed by many in Silicon Valley as a toxic brand. Definitely not a great place to work as was said ten years ago.
This makes it difficult for him to attract talents.
Meta has some serious issues going forward. This turning point may be just the beginning. (BBC Turkish)