For the first time in Facebook’s 18-year history, the number of daily active users (DAUs) has decreased.
DAUs declined to 1.929 billion in the three months to the end of December, down from 1.930 billion the previous quarter, according to Facebook’s parent company Meta Networks.
In addition, the company cautioned that revenue growth would decelerate due to competition from rivals such as TikTok and YouTube, as well as advertisers cutting back on spending.
In New York after-hours trade, Meta’s stock dropped by more than 20%.
Other social media platforms, such as Twitter, Snap, and Pinterest, saw their stock prices plummet in extended trading.
The company’s sales growth has been hampered, according to CEO Mark Zuckerberg, as audiences, particularly younger users, have defected to competitors.
Meta, which operates the world’s second-largest digital advertising platform after Google, claimed it was also impacted by Apple’s operating system’s privacy modifications.
According to Meta’s chief financial officer Dave Wehner, the changes have made it more difficult for marketers to target and measure their advertising on Facebook and Instagram, and might cost them “in the neighbourhood of $10 billion” this year.
In the time, Meta’s overall revenue, which is primarily made up of advertising sales, increased to $33.67 billion, narrowly exceeding market expectations.
It also predicted sales of $27 billion to $29 billion for the coming quarter, which is lower than experts had predicted.
While the firm has made its own video investments to compete with TikTok, which is controlled by Chinese internet giant ByteDance, the corporation makes less money from these products than it does from its standard Facebook and Instagram feeds.
Mr. Zuckerberg expressed confidence that the investments in video and virtual reality, like past bets on mobile advertising and Instagram stories, would pay off.
However, he pointed out that throughout past strategy revisions, the company didn’t have to compete with a large competitor.
“The teams are doing a great job, and the product is developing at a rapid pace,” he said. “What makes this situation somewhat unique is that TikTok is already a major rival and continues to expand at a rapid pace.”
The worldwide figures have been in one way for every quarter of its existence.
However, growth in Europe and the United States has slowed in recent years. This was obscured by an increase in users from other countries.
Facebook isn’t as popular among teenagers as it once was. TikTok, by its own admission, is hurting its company.
Investors are concerned about Meta for a variety of reasons.
Because it wished to focus on the Metaverse, Meta altered its name. But Meta isn’t even close to creating a Metaverse; it’s still a pipe dream.
Instead, it’s pouring billions of dollars into trying to build one, all because Mark Zuckerberg believes there’s a market for it – a tremendous gamble.
Is it possible that purchasing TikTok would solve Meta’s immediate problems? Because of anti-competition regulations, US officials would never allow it.
And many in Silicon Valley now regard Facebook as a poisonous brand. It’s not the same kind of cool place to work as it was, say, ten years ago.
It becomes increasingly difficult to attract talent as a result of this.
Meta is going to have some big issues in the future. This might be the start of something bigger.