Facebook is seeing a horrible year already after its parent company’s stock plunged more than 26% in a loss that caused over US$230 billion in market value, triggering Wall Street’s worst drop in close to a year.
Facebook announced its streak of user growth seems to be coming to an end and the company reported that the new Apple changes in its privacy system have made it harder for apps to track iPhone users and would cost the company about US$10 billion in advertising revenue this year.
CEO Mark Zuckerberg said Facebook was struggling to compete with the short-video app TikTok.
Even with this tight situation that Facebook has found itself in, the company’s expenses have skyrocketed after it poured sone US$10 billion into its augmented and virtual reality hardware in order to build its metaverse vision.
As for the users’ growth decline, Facebook had about 1.929 billion daily active users this quarter but had about 1.93 billion in the previous quarter.
This new number showed that the company’s growth has stalled in North America and Europe for some time and has in fact run out of users to add in other parts of the globe.
In a securities filing, 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.”
Even though there was some decline in the growth of Facebook, other Meta sub-brands such as Instagram, WhatsApp, and Messenger continued to add more users modestly.
But the specter of shrinking daily users, coupled with a company forecast for slower revenue growth than expected in the current quarter, rocked Meta shares in after-hours trading Wednesday, a death rattle that continued into Thursday, hitting shares of other social media stocks and the market as a whole.
“People have a lot of choices for how they want to spend their time and apps like TikTok are growing very quickly,” Zuckerberg said in prepared remarks Wednesday.
Meta is however trying to compete with TikTok by pouring billions into short-form videos and that includes the Reels for Instagram – which was launched back in 2020.
Facebook’s chief financial officer David Wehner also blamed an increase in internet data prices in India, its largest market, for the dip in daily active users.
Note: Meta and Facebook are used interchangeably.