Meta’s profitability fell in the fourth quarter of last year, raising concerns among investors, which in turn led its share to a “dip” of more than 20% in Thursday’s session.
Meta, the parent company of Facebook, Instagram and WhatsApp, posted a net profit of $ 10.3 billion during the last quarter of 2021, or $ 3.67 per share, down 5% from the same period in 2020 Analysts’ estimates set the net profit at $ 3.84 per share.
The company’s revenue, however, exceeded expectations. Meta’s sales reached $ 33.7 billion, higher than the $ 33.4 billion expected by the market.
As the name change shows, the company is trying to move from social media to a new era called metaverse, a digital “kingdom” accessible through augmented and virtual reality. to an idea that has not yet been largely proven, but which Meta CEO Mark Zuckerberg considers vital to boosting the company’s penetration of the young audience that has left Facebook.
Meta’s existing applications have been hit hard by last year’s scandal, when an informant leaked information about Facebook that intensified criticism of the social media for misinformation and the distribution of “problematic” content.
However, in the foreseeable future, Meta will continue to rely on its core advertising business. The vast majority of its revenue came from advertising in the fourth quarter of last year, when it generated about $ 32.6 billion.
Meanwhile, in the new financial statements released on Wednesday. Meta for the first time provided detailed information on its performance – and costs – regarding the metaverse project. The company’s new unit, which Meta calls Reality Labs, had sales of $ 877 million during the fourth quarter of 2021, as well as losses of $ 3.3 billion, up nearly 60% year-on-year. Reality Labs’ revenue came primarily from sales of virtual reality devices. For the whole of 2021, Reality Labs reported losses of $ 10.1 billion, up 50%.
“Our path forward is not yet clear,” Zuckerberg told a news conference Wednesday night, adding that he was “satisfied with the momentum and progress made so far.”
These figures, however, make it clear that the development of the “post-universe” is a costly endeavor, with Meta even facing stiff competition, with Snap announcing that it is promoting a similar project, as did Microsoft, which last month announced that it acquires the video game company Activision Blizzard, for $ 70 billion, as part of its “post-universe” goals.
Daily Facebook users decreased for the first time
Meanwhile, Facebook, as mentioned above, is losing some of its “followers”, in particular, as the parent company Meta announced on Wednesday, Facebook during the last quarter of 2021 lost for the first time in its 18-year history of daily users , a development that CEO Mark Zuckerberg attributed to fierce competition from fast-growing competitors, such as TikTok, to young audiences.
More specifically, Facebook lost about 500,000 daily users in the last three months of last year, which fell from 1.93 billion users worldwide to 1.29 billion, according to the Meta quarterly financial report.
The number of monthly users, however, remained virtually unchanged at 2.91 billion, while growth on Meta’s other platforms, namely WhatsApp, Messenger and Instagram, was modest.
In a rare moment of “recognition” of the competition, Zuckerberg stressed that Meta is threatened by the growth of video platforms such as TikTok and YouTube, as audiences watch more and more videos online.
Zuckerberg pointed out that Facebook had not had to deal with a major competitor during its previous strategic changes, describing the current situation as “somewhat unique”.
“TikTok is already a big competitor, and it continues to grow quite rapidly,” said Zuckerberg, adding that Meta is investing heavily in developing its own short video platform to compete with TikTok.
The decline in users, however, marks a turning point for Facebook, which from the first moment of its creation is constantly growing. Despite the slowdown in the US and Europe in recent years, the social network has continued to “grow” by adding users to other markets.
Lately, however, Facebook has struggled to attract the youngest internet audience. TikTok, on the other hand, is growing rapidly and is on track to become the application with the most users and most downloads in the world, while showing no signs of slowing down. It is so popular now that it has “stolen” from Google the title of the most popular domain on the internet, by the end of 2021, according to Cloudflare (Facebook.com is third). Just last year, TikTok was in seventh position.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
