Pavel Jelic If you are interested in the happenings in the technological world, or if you invest in shares, then you certainly did not miss the huge stock drop of the company Meta, i.e. Facebook, a few days ago. If you haven't noticed this drop, it's worth mentioning that this is the biggest drop ever for an American company on the stock market. During the day, Meta specifically lost 26% of its value, or $260 billion of its market capitalization. The company's CEO, Mark Zuckerberg, then lost a net worth totaling $90 billion. Most of you probably have no idea why this drop occurred, or what actually happened.
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Flying around the world with Apple Meta, like other companies, releases information about its financial results and reports to investors every quarter. Meta directly offers important data in its results about where it invested its finances, how much profit it had, or how many users use its social networks. It then explains to investors what its goals are for the next quarter or year, or what it plans for the more distant future. It should be mentioned that the fall in the stock market after the publication of Meta's financial results for the fourth quarter of 2021 was not caused by chance. What has negatively affected investors so much that they stopped trusting Meta?
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Investing in the Metaverse
Recently, Meta has been pouring a large portion of its finances into the development of the Metaverse. Simply put, this is a fictional universe that, according to Meta, is simply the future. In some time we should be running in a virtual world that could be better and more amazing than the real one. Whether you like this concept is of course entirely up to you. The important thing is that investors aren't exactly thrilled about it. And when they found out in the financial results of Q4 2021 that Meta had invested about 3,3 billion dollars in the development of Metaverse, they could have been scared. It is certainly not surprising, since most of us simply do not expect to leave our real lives and plunge into a fictional universe in the near and foreseeable future.
Small growth in the number of daily and monthly users
A small growth in the number of daily users of Meta's platforms could also be a big scare for investors. To be specific, in the previous quarter Q3 2021 the number of daily users of all platforms was 2.81 billion, while in Q4 2021 this number rose only minimally to 2.82 billion. This growth certainly does not continue the recent trend – just for example, in Q4 2019 the number of daily users was 2.26 billion. Since Facebook is a growth company, investors simply have to see this growth somewhere. And if they don't see it, then a problem arises - such as it is now. As for the number of monthly users of Meta's platforms, the growth here too is quite poor. In the previous Q3 2021, the number of monthly users was 3.58 billion, while in Q4 2021 it was only 3.59 billion. Again for comparison, in Q4 2019 the number of monthly users was 2.89 billion, so even here the reduction in growth is noticeable.
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Competition
In the previous paragraph, we said that the growth of users on Meta's platforms has slowed down significantly. This is mainly due to one thing, competition. At the moment, the digital world is rolling with the social network TikTok, which is not under the Meta company. Not long ago, TikTok surpassed 1 billion monthly active users, which is still more than three times less than all Meta's platforms combined, but you have to consider that TikTok is just one network, while Meta has Facebook at its disposal , Messenger, Instagram and WhatsApp. TikTok is really pushing its horns and it will be interesting to see where it will go in the future - it has a very good footing and will definitely continue to grow.
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Facebook is (most likely) going down
You might now be interested in how the daily and monthly users of the social network Facebook alone are doing. You will definitely be surprised in this case, as well as investors, because in Q4 2021, the number of daily users fell for the first time in the history of Facebook. While in the previous quarter Q3 2021 the daily number of active users of the social network Facebook was 1,930 billion, now in Q4 2021 this number has fallen to 1,929 billion. Considering the size of the numbers, the difference is small, but simply put, it's still a loss, not a growth, and that would be true even if the number of daily users decreased by just one person compared to the previous quarter. Again for comparison, in Q4 2019 the number of daily active users was 1,657 billion. If we look at the number of monthly active users of Facebook, a small growth can already be observed here, from 2,910 billion users in Q3 2021 to 2,912 billion in Q4 2021. Two years ago, in Q4 2019, the number of monthly active users was 2,498 billion .
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Apple Lossless Audio CODEC (ALAC),
Apple also plays a role in the downfall of Meta. If you read our magazine, then you surely know that the Californian giant Meta, then still a Facebook company, went awry. It decided to protect its users even more and recently introduced a feature in iOS that requires each app to ask you for permission to track in advance. If you reject the request, the application will not be able to track you, which is a problem especially for those companies that live on advertisements. That's the kind of company Meta is, and when word of this new Apple feature got out, it caused quite a stir. Of course, Meta tried to fight against the mentioned function, but unsuccessfully. Targeting ads on Facebook and other social platforms is thus much more difficult for iPhone users, which Meta directly states in the report to investors. This is another concern of investors, as iPhones are among the most used in the world.
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Adam Kos Low goals
Another thing, the last thing in this article, that caught investors off guard is Meta's decidedly low targets. The company's chief financial officer, David Wehner, says in a report to investors that Meta should earn a net profit in the range of 27 to 29 billion dollars this year, which represents year-on-year growth of between 3 and 11%. In general, Meta's annual growth is expected to be around 17%, which is alarming for investors. Meta's CFO said that this minor growth could be Apple's way and the aforementioned tracking ban. He cited inflation, which should reach large values this year, as well as poor exchange rates, among other causes.
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How do you feel about Facebook, and by extension Meta? Have you invested in this company but are now worried? Alternatively, are you taking the drop in market cap as an opportunity to buy the stock because you believe the Meta will bounce back up before long and that this is only a temporary reversal? Let us know in the comments.
Good for them. I'm not going to support these privacy traders who are cheating on people and only care about money, and they are going after it aggressively, almost over corpses. I don't have a single app of theirs and I don't use any of their services. But even so, I think Apple did a very good job of cutting off third-party spying without user consent.