Facebook‘s stock value dropped by more than 20% Wednesday, as the company reported losing users for the first time. Meta Platforms, the owner of Facebook, posted a weaker-than-expected forecast.
Facebook Losing Users
For the first time, Facebook’s global daily active users declined from the previous. Between the two previous quarters, the company’s daily users numbered from 1.930 billion to 1.929 billion. This is the first time that the company experienced losing users in between quarters.
In addition, the social platform reported 2.91 billion monthly active users during the fourth quarter. This means that Facebook did not generate growth compared to the previous quarter.
Meta pointed to a number of reasons for the decline. First, it blamed Apple’s changes to its privacy policies. It said that Apple’s operating system update made it harder for brands to target and measure ads on Facebook and Instagram.
Apple’s strict privacy changes won’t allow the use of private information unless the user specifically approves apps to do so.
In addition, Facebook is also facing increased competition from rivals TikTok and Google’s YouTube. These platforms focus on producing short video content that many users prefer over reading.
As a result, Facebook expects slowed revenue growth in the upcoming quarter.
As users gravitated towards short videos via Facebook’s Reels, users posted shorter engagement times. Reels, due to their short playtime, generate less revenue.
Meta Loses $200 Billion In Market Value
Consequently, users felt disappointed with Meta’s projections. The company shredded $200 billion within hours of its announcement.
Other social platforms such as Twitter, Snap, and Pinterest also lost a combined $15 billion. Meanwhile, Alphabet, the parent company of Google and YouTube, saw its share prices drop by 2%.
Previously, Meta warned about the effects of Apple’s changes in privacy. Apple’s decision pushes Facebook’s advertising business into significant uncertainty in the fourth quarter of 2021.
During a conference call, CFO Dave Wehner told analysts that Apple’s changes can cost Facebook around $10 billion in 2022.
With its adjusted numbers, Facebook now forecasts between $27 to $29 billion for its first-quarter revenue. Wall Street analysts are looking at $30.15 billion.
Competition For Daily Users
Unless Facebook stops the trend of losing users, it’s going to remain a downhill path for the social giant. Wehner said competition for users remains a major factor that’s impacting the business.
He mentioned the current popular video app TikTok by name. At the same time, he also emphasized Meta's commitment to providing services for young adults.
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What do you think about Facebook’s first instance of losing users? Is this a beginning trend of people moving out of Facebook into newer social platforms? Or, is there growing disinterest in social media as a whole?
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