On Wednesday, Meta, Facebook’s parent company, announced a gloomy mix of lower profits, fewer users and threats to its ad business that sent shares down by 22 per cent in after-hours trading.
As jittery markets punished pandemic-era darlings like Netflix for disappointing results, Meta also got a taste after its $10.3-billion quarterly profit and daily user growth failed to live up to expectations.
These are the first results since the company changed its name to Metaverse in late October; both a move towards the metaverse vision and a departure from its scandal-prone social media empire.
Facebook reported about one million fewer daily users during the last two quarters of 2021 – a tiny drop in an app that has nearly two billion daily users, but an indication of stagnation nonetheless.
David Weiner, CFO, told analysts that global user growth was hindered by “headwinds,” including growth disproportionately in Asia-Pacific during the pandemic, which has since slowed, and an increase in mobile data prices in India.
“In addition to these factors, we believe competitive services are negatively impacting growth, particularly with younger audiences,” Weiner added.
Although the company faces numerous probes and complaints of abuse of dominance, its executives have repeatedly pointed to competition from TikTok as well as from other networks.
Analysts expected 1.95 billion daily active users on Facebook, but Meta reported 1.93 billion — a key indicator of the growth trajectory for a company fueled by the people who choose to interact with its platforms.
Meta’s fourth-quarter net profit was $10.3 billion, down eight per cent from last year, but the company made $33.67 billion in turnover, in line with its forecasts.
Meta attributed the disappointing performance to competition and supply chain difficulties faced by its customers, the advertisers.
Watch | Meta shares plunge 20%, faces heat from Apple, TikTok
During after-hours trading, Meta’s shares fell by 22 per cent to $250 at 0010 GMT.
Furthermore, the company said the ad targeting rules imposed by Apple last year hurt its financial results in the fourth quarter.
As part of a recent update to its mobile operating system, Apple required application publishers to ask permission before collecting data, much to the chagrin of companies like Meta that rely on this information to target ads.