Meta platforms shares tumbled by about 27% in an impressive rout that, in its sheer scale, is unlike anything Silicon Valley and Wall Street has ever seen.
Facebook’s user progress looks to have hit an upper limit, and its momentum is stalling. Thursday’s (February 03, 2022) fall wiped out about USD 230 plus billion of industry value in an instant (a number unprecedented in stock-market history).
Mark Zuckerberg acknowledged that Meta is confronting serious competition for user time and attention, majorly from viral video-sharing application TikTok.
The report marks a spectacular turnaround for a firm that has posted share gains every year. Still, one since its 2012 preliminary public offering, stoking concern that Meta Platforms’ flagship product and core advertising moneymaker has plateaued after years of constant gains.
Zukerberg adds Meta’s rival to TikTok, Reels, is gaining popularity, but monetization has been slow. Thus, he requested investors for patience as the product ramps up.
Mark Zuckerberg added, “Over time we think that there is potential for a tremendous amount of overall engagement growth. We think it’s the right thing to lean into this and push as hard to grow Reels as quickly as possible and not hold on to the brakes at all, even though it may create some near-term slower growth than we would have wanted.”
The errors come at a crucial juncture for the firm battling regulatory skirmishes on several fronts and trying to rationalize a costly shift in corporate strategy to gamble on the Metaverse, Zuckerberg’s vision for an immersive internet that may take years to understand. However, seeing the current decade, it seems that Facebook will never stop growing. At present, young users are selecting platforms such as Google’s YouTube and TikTok for entertainment and community instead.
The company, which switched its name to Meta last year to signify its future direction, also said, “It will be taking on the META stock ticker in the first half of the year. Shares plunged as low as USD 237.07 in New York.”
Other social media firms also saw decline in their shares –
- Snap Inc., shares down by about 21%
- Pinterest Inc., shares down by about 8%
- Twitter Inc., shares down by about 5.1%
Meta’s Reality Labs division, which comprises the company’s investments in the metaverse and Virtual Reality (VR), stated an operating loss of about USD 3.3 billion for the fourth quarter, as the company revealed its contribution for the first time.
Meta said revenue will be USD 27 billion to USD 29 billion in the current period, compared with the USD 30.3 billion analysts estimated on average. Changes to Apple’s mobile software that require user permission to gather data for ad tracking are significantly crimping revenue by limited, targeted advertising.
“We believe the impact of iOS overall is a headwind on our business in 2022, on the order of USD 10 billion,” Chief Financial Officer David Wehner commented.
Chief Operating Officer Sheryl Sandberg said Menlo Park, a California-based company, is working to help advertisers target people with messages requiring fewer personal data.