Meta shares are down 20% because Facebook is losing its users for the first time on Reuters

By Elizabeth Culliford and Nivedita Balu

(Reuters) – Facebook (NASDAQ 🙂 Meta Platforms Inc.’s shares fell more than 20% on Wednesday after the social media company released a weaker-than-expected forecast due to Apple’s privacy changes and increased competition from users like TikTok.

Facebook’s daily active daily user base fell for the first time from the previous quarter to $ 1,929 million from $ 1,930 million.

Meta said Apple Inc. (NASDAQ:) ‘s privacy changes have been successful in its operating system, making it difficult for brands to target and measure Facebook and Instagram ads. He also mentioned macroeconomic issues such as supply chain disruptions.

The 18-year-old tech giant, which is also under pressure from platforms like TikTok and Google’s YouTube, said it expects to slow revenue growth in the next quarter as competition for users increases over time and changes its commitment to features like its short. Video Offers Reels, which generate less revenue.

Facebook had 2,910 billion monthly active users in the fourth quarter, compared to the previous quarter, with no growth.

The overdue decline in meta shares evaporated $ 200 billion in market value, and peers Twitter Inc. (NYSE :), Snap Inc. (NYSE 🙂 and Pinterest (NYSE 🙂 Inc. lost another $ 15 billion in value.

Shares of Alphabet (NASDAQ 🙂 Inc., which broke its quarterly record for sales on Tuesday, fell nearly 2%.

Meta, the owner of the world’s second-largest digital advertising platform after Google, had previously warned that its advertising business was “highly uncertain” in the fourth quarter.

Meta’s chief financial officer, Dave Wehner, told analysts in a conference call that the impact of Apple’s privacy changes could be “$ 10 trillion” by 2022.

Apple’s changes to its operating software allow users to prevent applications from tracking online ads, making it more difficult for data-driven advertisers to develop new products and gain insight into their market.

Meta expects revenue of $ 27 billion to $ 29 billion in the first quarter. Analysts had expected $ 30.15 billion, according to Refinitiv’s IBES data.

“Clearly, there are many major hurdles ahead of Meta’s new competition for ad revenue, as it faces ongoing challenges in targeting and measuring ads like TikTok as a result of Apple’s iOS changes,” said Debra Aho Williamson, an Insider Intelligence analyst.

The company’s total revenue, mostly from ad sales, rose to $ 33.67 billion in the fourth quarter from $ 28.07 billion a year earlier, beating analysts ’estimates of $ 33.4 trillion, according to Refinitiv’s IBES data.

“I am pleased to see the progress we have made over the past year in key growth areas such as Reels, commerce and virtual reality, and in 2022 we will continue to invest in these key priorities and others as we work to build metaverse.” CEO Mark Zuckerberg on profit statement.

In his call for profit, he said that user competition was a factor that affected the business, citing TikTok as a short video application and emphasizing Meta’s commitment to providing adult services.

At Meta’s Reality Labs, the company’s net and virtual reality net profit was $ 10.2 billion for the full year 2021, up from $ 6.6 billion in the previous year. It was the first time the company had broken this segment in its results.

Zuckerberg had previously warned that the company’s investment in this area would reduce its operating profit by $ 20 billion by 2021 and would not be profitable “in the near future.”

Reality Labs had revenue of about $ 2.3 billion in 2021. The company has not disclosed the sales numbers for its virtual reality Quest headphones.

The company said on Wednesday that it would change its stock ticker to “META” this year, the latest step in renewing its brand to focus on metaverse, a futuristic idea of ​​virtual environments where users can work, socialize and play. Meta did not comment on the price of a deal with Roundhill Investments, saying in January it would stop using its Roundhill Ball (NYSE 🙂 Metaverse ETF symbol.

The tech giant, which changed its name in October to reflect the goals of the metaverse, is betting on the metaverse that it will be the successor to the mobile Internet.

“Investors who look at Meta are beginning to realize that buying their shares is not an investment in most of the advertising platform,” said Flynn Zaiger, CEO of the online social network agency Optimism. “Investing in methane is like a commitment that you believe will now represent a large part of the Internet consumer experience.”

Meta’s crumbling brand comes at a time when lawmakers and regulators are gaining more and more control over allegations of anti-competitive behavior and the impact of its handling of harmful or misleading content on Facebook and Instagram platforms.