Mark Zuckerberg’s social media empire felt the full force of investors’ concerns about its growth prospects on Wednesday, as the revelation of Facebook’s first-ever drop in daily users helped trigger a share price rout.
It was the first set of quarterly results for the parent company of Facebook under its new name, Meta. Here are some key points to take away from the figures and why Meta’s stock fell 20% in after-hours trading.
Facebook is Meta’s biggest app and it recorded its first fall in daily active users – a key growth metric – since the company was founded in 2004. Page 13 of this slide deck shows what happened: global daily users dropped from 1.93 billion in the third quarter of 2021 to 1.929 billion. It was led by a decline in users in Africa and Latin America, which is worrying for Meta because it needs to grow outside of its main market in the US, where growth fell too, albeit not for the first time.
Last year a whistleblower, Frances Haugen, released internal documents that included presentations warning that Facebook was losing young users. One document revealed that “engagement is declining for teens in most western, and several non-western, countries”.
Zuckerberg, Meta’s founder and chief executive, identified the video-sharing app TikTok as a key contributor to the user growth problem. “People have a lot of choices for how they want to spend their time, and apps like TikTok are growing very quickly,” he said on Wednesday’s earnings call. Chinese-owned TikTok has 1 billion users worldwide and is one of the reasons why Meta is struggling to compete in the market for young consumers.
On the call, Zuckerberg said he was hopeful Facebook’s rival to TikTok, Reels, would help win back young users. “This is why our
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