Facebook parent company, Meta, reported a bleak mix of a larger-than-expected decline in profit, a reduction in users, and threats to its ad business, sending shares down 22 percent in after-hours trade.
Already, shaky markets have penalized pandemic-era top businesses like Netflix for poor results, and Meta is feeling the pressure after its $10.3 billion quarterly profit and daily user growth fell sharply.
Despite this, Facebook’s flagship platform lost around one million daily users globally over the last two quarters of 2021 – an app with nearly two billion daily users, but a fairly concerning sign of downturn.
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User growth has been hampered by some external challenges, according to CFO Dave Weiner, particularly disproportionate growth in Asia-Pacific during the pandemic, which has moderated, and an increase in mobile data prices in India.
“In addition to these concerns, we feel that competitive services are restricting growth, particularly among younger audiences,” Weiner continued.
While they are facing multiple investigations and charges of abuse of dominance, the company’s management have often mentioned competition from TikTok as well as other networks.
Analysts projected 1.95 billion daily active users on Facebook, but Meta reported 1.93 billion, a significant indicator of the company’s development trajectory as people choose to engage with its services.
However, on the financial side, Meta generated $33.67 billion in revenue, which was in line with expectations, but it earned $10.3 billion in net profit in the fourth quarter, which was 8% lower than the previous year.
Meta attributed the weak results due to rivals and supply chain issues that its clients, the marketers, were experiencing.
In after-hours trading, Meta’s stock was down approximately 22% to around $250.
At the same time, the company stated that the ad targeting limits imposed by Apple last year had a negative impact on its fourth-quarter financial results.
At the end of December 2021, 2.8 billion individuals used one of the company’s four platforms and messaging services ‘Messenger’ at least once a day, and 3.6 billion used them at least once a month.
