It’s fair to say that for most people, Facebook is still the most iconic social media platform around. It enjoys a huge number of daily and monthly active users, and there are still millions upon millions of posts, photos, and other types of content uploaded to Facebook each and every day. Ever since its humble beginnings as “The Facebook” back in 2004 (although it actually dates back further than that), Facebook has been a mainstay in the public imagination.
However, this may be about to change. Recently, the daily active user count for Facebook fell for the first time in its 18-year tenure. Of course, Zuckerberg and his company don’t necessarily need to be worried just yet; after all, the daily active user count remains high overall, and a fall doesn’t necessarily mean anything. However, since this is the first time the company has seen this happen, it caused ripples throughout the trading world. Let’s take a look at whether this spells doom for Facebook.
Daily active users haven’t fallen for Facebook in 18 years
In the three months leading up to the end of December 2021, Facebook’s parent company, Meta, says that daily active users dropped to 1.929 billion from a previous high of 1.930 billion in the last quarter. As you can see, this isn’t necessarily a precipitous drop, but it’s the first time daily active users for the app have dropped in its entire history as a public company.
So, why have daily active users fallen? Meta is blaming other social media apps like the Chinese-owned TikTok and Google’s YouTube, with more young users spending time on those platforms than Facebook. This has also been the cause of slowing revenue growth on the part of Facebook, and has also led to advertisers slashing their spending with Zuckerberg’s platform.
This fall has caused a huge drop in Meta and Facebook shares. Facebook has never been justified in calling its earnings for a particular quarter “disappointing”, and yet that’s exactly what the company has run into this time. Incredibly, the drop led to Facebook shares plummeting by a staggering 26% last week, with the fall representing around $200 billion of Meta’s market worth. That’s a bigger fall than many companies’ entire worth combined.
This has also led to a fall in Zuckerberg’s personal net worth. Presently, estimates suggest that Zuckerberg’s net worth is around $84.8 billion, but that number was slashed by an incredible $29 billion. Each and every day that Facebook continues to lose share price is another blow to Zuckerberg and his company; estimates suggest that Zuckerberg could lose up to $2 billion a day in net worth as the company slumps further and further down.
It’s not just Facebook
Facebook and its parent company Meta are so huge that when they get hit by negative stock changes, the entire market responds. Shares also fell for rivals such as Twitter and Pinterest, likely because Zuckerberg specifically named TikTok and YouTube in his explanation as to why his company’s shares were performing so poorly. This just goes to show that the markets are essentially volatile, and respond to moment-to-moment changes in huge, unpredictable ways.
The vast majority of Meta’s revenue comes from advertising, and the same could likely be said for many of its rivals. As such, when advertisers start to pull out, citing market instability, it looks very bad indeed for Meta and other companies that rely on advertising revenue in this way. Other social media platforms are suffering as a result of the dominance of TikTok and YouTube over the social media world, and this problem is only likely to get worse for these companies as time goes on.
It’s not the end
Obviously, Facebook’s user count is still incredibly high. 1.929 billion users is not to be sniffed at, and still represents the single highest daily user count. In addition, Facebook is sitting at around 2.8 billion monthly active users, so the fall it reported in the last quarter of 2021 shouldn’t necessarily be taken as apocalyptic for the company. There are still billions of registered accounts, of course, but one shouldn’t look too closely at that; many users don’t deactivate their accounts, so those accounts could be inactive.
While the stock price of Facebook and Meta aren’t likely to have fallen due to ethical reasons, the user base may be deserting the platform largely due to controversies surrounding Facebook in recent years. Concerns over how Facebook handles data and privacy are driving many users away from it and towards other platforms, and although both YouTube and TikTok have privacy issues as well, they’re nowhere near as pronounced or publicised as those that Facebook is struggling with (although Google may suffer from this in the future as well).
What’s next for Facebook?
In the investors’ call in which Mark Zuckerberg laid out Facebook’s stock woes and the reasons behind them, he also went into some detail regarding what the company intends to do next. Zuckerberg’s plan is to pump resources into competitors to the platforms currently responsible for Facebook’s decline, including the new Reels feature, which will compete with TikTok for short form video content.
Zuckerberg says he’s also intending to focus on the development of Facebook’s metaverse efforts, which will see the company branch into fully virtual spaces that users can inhabit, create in, and – perhaps most importantly for the company’s fortunes – make and spend money in as well. It remains to be seen whether Zuckerberg can turn Facebook’s fortunes around, but one thing’s for sure: there’s trouble ahead for the social media giant.
