The company’s and its co-financial founder’s results for the fourth quarter of 2021 have set in motion a rather dramatic chain of events. Facebook’s shares are now 25% lower than they were before Meta released the results showing a drop in daily active users. It is now being described as the largest one-day stock market crash in history.
If you’re looking for figures, Meta’s market value has dropped by more than $230 billion (roughly Rs 17 lakh crore) since its earnings call. The stock market has taken a massive hit, and it isn’t just the company.
The report cites two key reasons for the massive drop, which is said to be the largest in US stock market history. One, for the first time ever, the number of daily active users on Facebook decreased in the fourth quarter of last year. This was attributed to increased competition from TikTok as well as a price increase in internet data in India, according to the company.
Since the majority of Meta’s revenue comes from advertising on its various online platforms, a drop in active users indicates a drop in ad revenue from these entities, such as Facebook and Instagram. However, Meta’s ad revenue is hampered by another issue.
Remember the long and public feud between Apple and Meta (at the time, Facebook) over the latter’s new privacy feature? It’s finally come back to bite Meta. According to Meta’s estimates, Apple’s App Tracking Transparency (ATT) feature will reduce ad revenue by $10 billion this year. For investors in the company’s stock, the prediction was yet another red flag.
As reported by Forbes, the earnings call also revealed that the company spent $10.1 billion on its metaverse plans in 2021. While Zuckerberg pursues this new area of interest for the global tech community, Meta may face a hard time sticking to its roots going forward.
