Facebook just suffered its worst Wall Street day in history


Despite all the difficulties Facebook has had over the years there is one constant: More people are signing up and log on.

However, this changed in the final three months of 2021 when the largest social network on the planet lost daily users for first time ever.

Meta, Facebook’s parent, had its worst day on Wall Street. Disillusioned investors cut its market value by 26%, or more than $250 Billion, on Thursday. Mark Zuckerberg, CEO, pointed out intense competition from TikTok, the latest social media juggernaut.

Investors were told Wednesday by he that people have many options for how to spend their time and that apps like TikTok are growing rapidly. TikTok has been a huge competitor and continues to grow at a rapid pace. This is what makes TikTok unique.

The Chinese-owned video app, which is hugely popular, is trying to steal advertising dollars and users from Facebook and Instagram. This threatens the heart of a company that last year generated $115 billion in revenue.

Meta is trying to catch up to new features such as Instagram Reels, an app that is a TikTok-clone. The company hopes to keep young users interested in the feature.

Investors were still spooked when Zuckerberg acknowledged that TikTok has an unsurmountable head start.

Rich Greenfield, analyst at LightShed Partners, stated that “the threat is so great that Facebook is being forced change its products to reproduce TikTok because TikTok’s what clearly consumers want” According to him, Meta’s plunge in share price was a sign that TikTok had reached escape velocity.

TikTok isn’t the only problem Meta has.

Meta has been unable to sell targeted ads because Apple changed its privacy settings for iPhones. Meta estimates that this could result in lost sales of $10 billion.

Zuckerberg stated that he was rebuilding much of his ads infrastructure to allow him to continue growing and deliver high-quality personalized ads.

Then there’s Zuckerberg’s desire to be “a metaverse corporation.”

To signal the company’s new focus on the future virtual world, he changed Facebook’s name to Meta last fall. It will take a lot of money to build it: Meta reported a loss of $10 billion in its Reality Labs division last year. This division designs and builds virtual reality hardware and software, such as Quest 2, which will be used for the metaverse.

Due to the rising costs, a rare drop in quarterly profit to $10.3 million was achieved.

Zuckerberg acknowledged Wednesday’s call that the future was uncertain.

Zuckerberg stated that “this fully realized vision” is still far off. “And even though the direction is clear, it is unclear what our path forward looks like.”

According to LightShed’s Greenfield, many shareholders don’t want to know the truth.

He said, “Investors can handle negative news, but investors can handle positive news.” Investors hate lack of visibility.