What just happened? Meta’s fourth-quarter earnings report brought an unwelcome statistic for the company. For the first time since its inception 17 years ago, the number of global daily Facebook users declined. The news saw company shares fall as much as 24% in extended trading, wiping around $200 billion off Meta’s market value.
Facebook’s earnings report shows daily users fell from 1.93 billion to 1.929 billion in the fourth quarter as the platform continues to be viewed as the ‘older person’s’ social media site in the face of companies such as TikTok.
Facebook’s teen and young adult users are spending less time on the social network, and people are joining at older age: around 24 or 25. In October, CEO Mark Zuckerberg said Facebook was “retooling” to “make serving young adults their north star,” with a renewed focus on TikTok-style videos.
“What’s unique is that TikTok is so big as a competitor already, and also continues to grow at quite a fast rate off of a very large base,” said Zuckerberg in an earnings call. He went on to say, “I think overall engagement will grow […] and that’s why we’re optimistic about the future. But there’s a lot of work to do here.”
Meta’s profit and revenue growth were also lower than expected due to inflation and Apple’s ad-tracking privacy policy that Facebook has long complained about. “The accuracy of our ads targeting decreased which increased the cost of driving outcomes,” said COO Sheryl Sandberg.
But the company still made $33.76 billion in revenue during the quarter, up 20% year-on-year, and the overall number of daily active users across all its apps grew, albeit not by much—from 2.81 billion to 2.82 billion.
Meta also revealed details of its AR and VR division (Reality Labs) for the first time, an important part of its metaverse plans. The division made a $10.2 billion loss in 2021, though Zuckerberg admitted that “This fully realized vision [metaverse] is still a ways off.” He also said the company’s next VR headset will arrive this year at the “high end of the price spectrum.”
Following one of its most reputation-damaging 12 months in years, Facebook was voted the worst company of 2021 in December.
