Meta Platforms Inc, which owns Facebook, saw its stock drop more than 20% late Wednesday after the social network firm issued a weaker-than-expected projection, blaming Apple’s privacy reforms and greater competition for consumers from rivals such as TikTok.
For the first time, Facebook’s global daily active users fell from 1.930 billion to 1.929 billion in the third quarter.
Apple Inc.’s privacy modifications to its operating system have made it more difficult for marketers to target and measure their Facebook and Instagram ads, according to Meta. Macroeconomic concerns, such as supply-chain disruptions, were also mentioned.
The 18-year-old tech behemoth, which is also under pressure from platforms such as TikTok and Google‘s YouTube, said it expects revenue growth to slow in the coming quarter due to increased competition for users’ time and a shift in engagement toward features such as its short video offering Reels, which generate less revenue.
In the fourth quarter, Facebook recorded 2.91 billion monthly active users, with little growth compared to the previous quarter.
After-hours losses in Meta shares wiped down $200 billion in market value, while peers Twitter Inc, Snap Inc, and Pinterest Inc lost $15 billion.
Alphabet Inc’s stock was down roughly 2% after reporting record quarterly sales that beat estimates on Tuesday.
Meta, which owns the world’s second-largest digital ad platform behind Google, has previously warned that the fourth quarter would bring “substantial volatility” to its advertising business.
On a conference call with analysts, Meta’s chief financial officer, Dave Wehner, said the impact of Apple’s privacy measures is “on the range of $10 billion” in 2022. Apple has made modifications to its operating software that allow users to opt-out of apps tracking their online activity for advertising purposes, making it more difficult for advertisers that rely on data to develop new goods and understand their market.
In the earnings statement, CEO Mark Zuckerberg said, “I’m encouraged by the progress we made this year in a lot of important growth areas like Reels, commerce, and virtual reality.” “As we endeavor to develop the metaverse in 2022, we’ll continue to invest in these and other essential objectives.”
For more updates, stay tuned with us!!
