{"id":33269,"date":"2022-02-10T15:02:00","date_gmt":"2022-02-10T15:02:00","guid":{"rendered":"https:\/\/mathewingram.blog\/?p=33269"},"modified":"2022-02-10T15:02:00","modified_gmt":"2022-02-10T15:02:00","slug":"meta-is-looking-a-lot-less-invincible-these-days","status":"publish","type":"post","link":"https:\/\/mathewingram.com\/work\/2022\/02\/10\/meta-is-looking-a-lot-less-invincible-these-days\/","title":{"rendered":"Meta is looking a lot less invincible these days"},"content":{"rendered":"\n

Note<\/strong>: This was originally published as<\/a> the daily newsletter for the Columbia Journalism Review, where I am the chief digital writer<\/em><\/p>\n\n\n\n

Over the past few years, criticism of “Big Tech” has grown from an undercurrent of dissatisfaction into a full-fledged crusade by Congress<\/a>, the Federal Trade Commission, and other critics to blunt the power of the quasi-monopolies that control consumer technology, and Facebook\u2014which recently changed its name to Meta\u2014has been at or near the top of that short list<\/a>. When Congress held hearings into the 2016 election, Mark Zuckerberg, Meta’s CEO, was front and center<\/a>, as he has been in antitrust lawsuits<\/a> launched by the FTC and a number of states. This isn’t surprising, given Meta’s control over the information consumption habits of more than two-and-a-half billion people around the world. Despite all this negative attention, however, Meta’s market power continued to grow, along with its market value, which climbed as high as a trillion dollars last year<\/a>, up from three hundred billion in 2017.<\/p>\n\n\n\n

The past week has been a very different story, however. On February 2, Meta’s market value was still close to seven hundred and sixty-five billion dollars, not that far from its peak, at least in proportional terms<\/a>. The following day, its share price fell by more than twenty-five percent, wiping about two hundred billion dollars from the company’s market value\u2014the largest decrease in value<\/a> in the history of US stock exchanges, according to a report from CNBC. When the dust settled, Meta’s share price was lower than it had been since May of 2020<\/a>. The stock dropped again the following day, although not by as much, and fell again the day after, although it has since recovered somewhat.<\/p>\n\n\n\n

What happened? The most obvious answer is that Meta reported its quarterly financial results, and investors and stock analysts didn’t like what they heard<\/a>. Although the company’s revenue was a little above expectations, its forecast for the current quarter was well below<\/a> what analysts were looking for, and its earnings were much lower than consensus forecasts. Most important of all, the number of users who login to the service every day fell for the first time in the company’s<\/a> eighteen-year history, to below two billion<\/a>. The drop was not a very large one, but when you have been growing steadily for more than a decade, even a small drop can take on huge importance. As the Washington Post<\/em> noted<\/a>, the loss of users “was greatest in Africa, Latin America and India, suggesting that the company\u2019s product is saturated globally.”<\/p>\n\n\n\n\n\n\n\n

Meta’s user numbers in the US have been flat or falling for several years now<\/a>, but the growth in the rest of the world has so far made up for those setbacks. If that has come to an end, it means there could be little or no growth in the future, and that’s a very bleak prospect for a growth-oriented stock (Meta has also said<\/a> it may have to shut down its apps in Europe due to data-handling rules). This means even more pressure on the company<\/a> to come up with victories in other areas of its business, and so far it doesn’t have many to speak of. Although it changed its name to Meta to indicate that the “metaverse”<\/a> is the future, analysts believe it could be years<\/a> before Meta starts generating any kind of significant revenue from its efforts in this area. At the moment, the metaverse is just a rather large hole into which Meta has poured more than $20 billion<\/a>.<\/p>\n\n\n\n

Meanwhile, analysts say Meta is under increasing pressure from TikTok, the Chinese-owned mobile video app that is popular<\/a> with younger users. According to some estimates, the amount of time that the average smartphone owner spends with TikTok exceeded the amount they spend with Facebook<\/a> for the first time last year, and has continued to grow. While Meta’s user base is stagnating or even falling, TikTok’s has been growing rapidly\u2014it passed the one billion mark late last year<\/a>. According to a number of recent reports, Mark Zuckerberg has told Meta staff that the company needs to shift its resources to short-form video<\/a>, in an attempt to counter the competitive threat from TikTok. Last year, Meta announced plans to pay content creators more than a billion dollars, in an attempt to get them to pick Meta<\/a> rather than TikTok.<\/p>\n\n\n\n

Meta has also tried to promote a knockoff version of TikTok called Reels, which it launched as part of its Instagram photo and video-sharing app, but the early reviews have been pretty bleak<\/a>. That’s not to say Meta won’t be able to make some headway\u2014analysts say its copycat version of Snapchat’s Story feature, released in 2016, helped blunt the competitive force of that feature, and solidified Instagram’s growing market share<\/a>. But the pressure from TikTok was a lot more palatable to investors when Meta as a whole was still growing globally, and that no longer appears to be the case\u2014and its big bet on the metaverse future is a very long bet that may never pay off. Market experts like to say that the stock market is an eternal war between greed and fear, and in the case of Meta, fear seems to have gotten the upper hand.<\/p>\n\n\n\n

Here’s more on Meta:<\/p>\n\n\n\n