Facebook Loses Over a Million Daily Active Users in 2021

Facebook’s parent company, Meta, reported a bleak mix of a larger-than-expected drop in profit, a drop in users, and threats to its ad business on Wednesday, sending shares down 22 percent in after-hours trading.

Already, jittery markets have punished pandemic-era darlings such as Netflix for disappointing results, and Meta has had a taste of that after its $10.3 billion quarterly profit and daily user growth fell short of expectations.

Despite this, Facebook’s flagship platform lost roughly one million daily users globally between the last two quarters of 2021 — a small number on an app with nearly two billion daily users, but a potentially concerning sign of stagnation.

CFO Dave Weiner told analysts that “headwinds” such as disproportionate growth in Asia-Pacific during the pandemic, which has slowed, and an increase in mobile data prices in India have hampered user growth.

“In addition to these factors, we believe competitive services are having a negative impact on growth, especially among younger audiences,” Weiner added.

While facing numerous probes and complaints of abuse of dominance, the company’s executives have repeatedly referred to competition from TikTok as well as other networks.

Analysts predicted 1.95 billion daily active users on Facebook, but Meta reported 1.93 billion — a key indicator of the company’s growth trajectory for a company fueled by the people who interact with its platforms.

On the financial front, Meta achieved a revenue of $33.67 billion, in line with its forecasts, but it earned $10.3 billion in net profit in the fourth quarter, 8% less than the previous year.

Meta cited competition and supply chain issues faced by its customers, the advertisers, as reasons for the poor performance.

In after-hours trading, Meta’s share price was down about 22% to around $250  at 00:10 GMT (5:40am IST).

At the same time, the company stated that the ad targeting rules imposed by Apple last year had a negative impact on its fourth-quarter financial results.

“Meta’s revenue growth may be in the single digits. And that is before any further legal or regulatory developments or actions are taken “Scott Kessler, an analyst at Third Bridge, stated.

“It appears that many people are re-evaluating in real time,” he added.

As of December 31, 2021, 2.8 billion people used one of its four platforms or messenger services at least once per day, and 3.6 billion used them at least once per month.

Cost of the Metaverse

These are the first results released by the company since its name change in late October, which was both a move toward the metaverse vision and a move away from its scandal-ridden social media empire.

Last year’s whistleblower crisis at the Silicon Valley behemoth highlighted allegations that executives prioritized growth over the safety of their billions of users.

Scandalous news reports based on internal documents leaked by ex-employee Frances Haugen rekindled long-stalled regulatory efforts, but US legislators have made little progress since.

The Real Facebook Oversight Board, an activist group, seized on the results to warn of what might come next.

“Facebook appears to be now feeling the impact of Apple’s new privacy-first approach on ad revenues,” the group said in a statement.

“This will no doubt make them even more desperate to drive ad revenue by any means necessary,” it went on to say.

Meta is placing a large bet on its belief that the metaverse will be the next major evolution in how humans interact with the internet.

In this science-fiction-inspired future, people will use augmented reality glasses and virtual reality headsets to get around, work, and play.

However, its construction entails tens of billions of dollars in investment in the Facebook Reality Labs branch, with no immediate benefits.

“There’s a lot of uncertainty about Meta’s investments in the metaverse and whether or not they’ll have a positive impact on the company’s bottom line,” analyst Debra Aho Williamson said.