A day later, Facebook disclosed that its streak of user growth had reached a dead end, Stock of the parent company is plunged more than 26% in a severe loss that wiped out more than USD 230 Bn in market value and resulted in Wall Street’s most defeating drop in close to a year.
Facebook reported an aggressive loss in user growth, and a collision came in when Meta reported earnings on Wednesday.
Facebook revealed Apple changes that made it challenging for apps to track iPhone users would cost nearly USD 10 billion in advertising revenue this year.
Mark Zuckerberg, Facebook CEO, said that Facebook faces tough competition from the short-video Chinese app, TikTok.
The company’s expenses soared high as it invested USD 10 billion in virtual reality hardware and augmented reality to create its “metaverse.”
However, the most upsetting news for Facebook was that it had witnessed its first-ever severe decline in active daily users.
In the fourth quarter, Facebook had 1.929 billion daily active users against 1.93 billion in the last quarter, revealing that the company whose user growth has paused in Europe and North America for some time has run out of users to add in the rest of the world.
Meta warned: Any future declines in the size of our active user base may adversely impact our ability to deliver ad impressions and, in turn, our financial performance.
However, not all news was negative. Some user metrics showed decent growth. The company’s other apps, WhatsApp, Instagram, and Messenger, added new users at a decent rate. And the number of users logging in to Facebook continued to increase.
However, the reduction in daily users, accompanied by a sluggish revenue accumulation forecast in the current quarter, plunged Meta shares in after-hours trading Wednesday, which continued to Thursday, severely affecting shares of other social media stocks and the market altogether.
Zuckerberg remarked, “People have a lot of choices for how they want to spend their time and apps like TikTok are overgrowing,”
To compete with TikTok, Meta is making a significant investment to come up with engaging short-form videos, like Reels, which was launched on Instagram back in 2020.
Since India is its largest market, David Wehner, Facebook’s Chief Financial Officer, remarked that increased data prices in India brought a severe impact on its users.