parent company Facebook worth more than $ 230 billion in one day

The Meta share fell 23 percent after a highly disappointing quarterly report from the social media group. It is the largest single-day drop in the history of the US stock market in dollars, reports the financial news agency Bloomberg.

Meta’s depreciation followed an announcement from the company that it expects to see less advertising revenue in the near future as companies increasingly suffer from persistently high inflation and supply chain disruptions.

Meta expects sales of between $ 27 billion and $ 29 billion for the first quarter. That would mean a growth of 3 to 11 percent. That is much, much less than what experts took into account.

According to Meta, the lower turnover is partly due to Apple. The terms of use for mobile apps on Apple operating systems have changed. Users can indicate that they do not want apps to track their online activities. It’s therefore more difficult for advertisers to reach highly targeted audiences via Facebook or Instagram, and this puts Meta’s revenue model under pressure. According to Meta, it could cost around $ 10 billion in sales.

The popularity is declining, partly due to TikTok

Advertising revenue is by far the most important thing for the business and it also depends on the number of users of the social media channels. At Meta, the number of daily users was lower than expected. Meta has 1.93 billion users, but the market had estimated 1.95 billion. Besides the daily use, the monthly use is also a bit disappointing. There are 2.91 billion monthly active followers on Meta platforms, 2.95 billion were expected.

This is the first time in Facebook’s 17-year history that the number of active users has dropped. Competition has therefore increased significantly. Young people in particular have been flocking to competitor TikTok for some time now. “People have a lot of choices in terms of how they spend their time, and apps like TikTok are growing fast,” Facebook founder Mark Zuckerberg said in a presentation to analysts.

Leaked documents have previously shown that Facebook’s popularity is declining among young people. The time teens spend on Facebook has dropped by 16 percent in a year, the report shows. And people in their twenties also spend fewer hours on Facebook.

It is not surprising that fewer and fewer young adults are still creating a profile. According to New York Times Instagram’s popularity among this group is also declining. When this was leaked last year, it did not affect Meta yet.

Strong competition

But now Mark Zuckerberg himself warns of the competition. He told analysts that TikTok will put pressure on Meta’s advertising model in the short term. Such comments are a kind of profit warning that does not make investors happy. In fact, other social media companies like Snap and Twitter also lost value in the stock market; 20 and 6.5 per cent, respectively.

Admittedly, Meta is trying to attract young people, for example with Reels, with which users can post short videos, but this is not yet the success they were hoping for.

Meta also invests in Reality Labs. This business unit makes the hardware for virtual reality and augmented reality. Meta believes that we will all be in the meta-verse in the foreseeable future. It is a virtual world where we can work, play and meet with friends. CEO Zuckerberg sees so much future in this that he has changed the name of his company – Facebook – to Meta.

At Reality Labs, sales rose to $ 877 million. That was $ 717 million a year earlier.

Also read:

Facebook’s dirty truth? Growth above all else: ‘They bring terrorism with them’

Harassment, genocide, influence on elections: Facebook posts are increasingly causing misery in the real world. It takes the company with it, profit comes first, writes Cecilia Kang in her bestseller A Dirty Truth.

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