Since Facebook renamed itself “Meta” to highlight its entry into the metaverse, the company has been going through a delicate patch. For the first time in its history, the social network is losing users. The results of its fourth quarter are hardly flamboyant and its forecasts for 2022 are gloomy.
Revenue stagnates, profits fall, so do Facebook followers
For the fourth quarter of 2021, the Californian group reveals a turnover in the high range of its forecasts: 33.67 billion dollars. Nevertheless, it generated only $10.3 billion in net profit, 8% less than last year’s result. Problem, at least for the shareholders, the metaverse dreamed up by Mark Zuckerberg, founder and CEO of Meta, cost 10 billion dollars to his company, but generated only 2.3 billion dollars in turnover.
Beijing tries to create a special committee to circumvent US sanctions
As of December 31, 2021, 2.8 billion people visited one of the brand’s four services (Facebook, Instagram, Messenger and WhatsApp) at least once a day and 3.6 billion at least once a month. These figures are up slightly over one year, but are almost equivalent compared to the third quarter of 2021. A result in itself rather disappointing which was accompanied by an aggravating factor: Facebook lost around 1 million active daily users in three months, bringing the total to 1.929 billion users at the end of December 2021.
With all these announcements and the economic context, a little less favorable to the technological giants, Meta saw its action collapse by around a quarter, which corresponds to 210 billion dollars.
How to explain Meta’s disappointing fourth quarter of 2021?
Meta explains these unsatisfactory figures by its difficulty in retaining the attention of its users, its core business, with the strong competition in the field of social networks. The company refers in particular to the “Reels” video format present on Instagram, directly inspired by the videos available on the TikTok application.
These videos generate lower rates of pay than the classic formats originally used on Instagram or Facebook. ” People have a lot of choices about how they want to spend their time. And apps like TikTok are growing really fast. “says Mark Zuckerberg.
In offering the Reels, Instagram was inspired by the very popular application TikTok. Nevertheless, the advertising techniques that can be used with this video format generate less money than the other techniques used by the social network. Screenshot: Instagram.
The rules imposed by Apple in terms of advertising targeting add to this context of heightened competition. They have very direct negative consequences on the results of Meta, at least that is what the firm considers. The Tim Cook-led company requires app publishers to ask permission to collect data, much to the chagrin of companies like Meta whose business model relies on selling personalized ads based on consumer tastes. The company has said it is ready to counter these new rules in the coming months.
Finally, the construction of the metaverse costs a lot. For now, the company is investing several billion dollars in its branch Facebook Reality Labs, without making immediate profits. Meta says to see in the long term, “the era of the metaverse”. The one where the company dreams of imposing itself when it exists in a successful way, in five to ten years, she estimates. Will shareholders be as patient if Meta indicators don’t improve quickly? The group remains one of the most powerful in the world, but it is warned.