Facebook’s user growth faltered in the latest quarter, the first stagnation in the social network’s history, part of dire earnings that caused Meta Platforms’s stock to collapse 25 per cent intra day on Thursday, set to wipe over $200 billion from its market value.
The company also gave a disappointing sales forecast for the current period, and Chief Executive Officer Mark Zuckerberg, who saw his personal wealth potentially plummet about $24 billion, acknowledged that Meta is facing serious competition for user time and attention, particularly from viral video-sharing app TikTok.
The dour outlook and stalled user momentum is a dramatic turnaround for a company that has posted share gains in every year but one since its 2012 IPO, stoking concern that Meta Platforms flagship product and core advertising moneymaker has plateaued after years of consistent gains.
Zuckerberg said Meta’s rival to TikTok, Reels, is growing quickly, but monetisation has been slow, and he asked investors for patience as the product ramps up.
Meta’s Reality Labs division, which includes the company’s investments in the metaverse and virtual reality, reported an operating loss of $3.3 billion for the fourth quarter, as the company disclosed its contribution for the first time.
The company, which changed its name to Meta last year to indicate 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 $244 in late trading, after closing at $323 in New York. The stock, which currently trades under the ticker FB, had declined 4 per cent so far this year through Wednesday’s close.
The misses come at a critical juncture for the company, which is fighting regulatory battles on multiple fronts and also trying to justify a costly shift in corporate strategy to bet on the metaverse, Zuckerberg’s vision for an immersive internet that may take years to realize. For the better part of a decade, it has seemed like Facebook would never stop growing. Now young users — the future consumers of its advertising — are choosing platforms like TikTok and Google’s YouTube for entertainment and community instead.