Doubts about Facebook in the face of the 1st drop in daily active users in its history

For the first time since it launched 18 years ago, Facebook’s daily active user (DAU) has dropped, a reflection of the social network’s declining popularity among young people and the loss of ground to competition. .

Facebook parent company Meta Networks reported that DAUs dropped to 1.929 billion in the three months to the end of December, compared with 1.930 billion in the previous quarter.

It also warned of slowing revenue growth in the face of competition from rivals like TikTok and YouTube, while advertisers are also cutting spending.

Meta shares are down more than 20% in after-hours trading in New York.

The drop in Meta’s share price wiped out about US$200 billion (R$1 billion) from the market value of the company’s shares.

Shares of other social media platforms such as Twitter, Snap and Pinterest also dropped sharply in trading after the markets closed.

Mark Zuckerberg, CEO of Meta Networks, said that revenue growth was hampered as audiences, especially younger users, left the social network and migrated to rivals such as TikTok.

Meta, which owns the world’s second-largest digital advertising platform after Google, also said it was hit by privacy changes to Apple’s operating system.

The changes have made it more difficult for brands to target and measure their advertising on Facebook and Instagram and could have an impact “on the order of $10 billion” this year, according to Meta’s CFO Dave Wehner.

Meta’s total revenue, most of which comes from advertising sales, rose to $33.67 billion in the quarter, narrowly beating market forecasts.

The company also forecasts revenues between $27 billion and $29 billion for the next quarter (January to March), which is lower than analysts had expected.

While the company has made its own investments in video to compete with TikTok — owned by Chinese tech giant ByteDance — it makes less money from these services than it does from its traditional Facebook and Instagram feeds.

Zuckerberg said he’s confident the investments in video and virtual reality will pay off, as have previous bets on mobile advertising and Instagram stories.

But, he noted, amid previous changes to its strategy, the company has never had to face a major rival.

“The teams are performing very well and the product is growing very quickly,” he said. “What’s unique here is that TikTok is already such a big competitor and also continues to grow at a pretty fast pace.”

Declining target?

Analysis by James Clayton, BBC Technology Reporter in North America

Facebook has always been a growing platform. For every quarter in its existence, the global numbers went in one direction.

But in recent years it has stagnated in Europe and the United States. This ended up masked by the increase in users in the rest of the world.

Facebook is not as popular with younger people as it used to be. As the company acknowledges, TikTok is hurting business.

But there are also other reasons why investors are worried about the Meta.

Facebook changed its name because it wanted to focus on the Metaverse. But the Meta is nowhere near building a Metaverse; this is still a dream at the moment. Instead, it’s pumping billions of dollars into trying to create it — all because Mark Zuckerberg thinks there’s an appetite for it.

But that means a huge risk.

Perhaps the answer to Meta’s immediate problems is to buy TikTok? Well, US regulators would never allow that due to competition laws.

And Facebook is now seen by many in Silicon Valley as a toxic brand. It’s certainly not a cool place to work in the same way it was ten years ago.

This makes it more difficult to attract talent.

Meta has some serious problems going forward. This milestone may be just the beginning.