Facebook share prices drop dramatically on late Wednesday (Feb 3rd 2022) evening and continued to trade almost 30% lower from the Jan 2022 opening. Stagnant user base and less screen time on the site is being cited as one of the major reasons for Facebook share price drop.
VOA reported that the, same technology companies that helped drag the U.S. stock market back from the depths of the pandemic recession in 2021 led the market into a sharp plunge on Thursday after Meta Platforms, the company that owns Facebook, revealed that user growth on its marquee product has hit a plateau, and revenue from advertising has fallen off sharply.
Although the pain was spread broadly across the tech sector Thursday, it was the travails of Facebook that captured much of the public’s attention. The company’s shares, which were trading at $323 when the markets closed Wednesday, opened on Thursday at $242.48 and never recovered, closing at $237.76.
The 27% decline in the company’s share value translated into a loss of more than $230 billion in market value, an utterly unprecedented one-day loss for a single firm.
The share price began its tumble after the company announced for the first time ever that its total number of monthly users had not risen in the fourth quarter of 2021. Additionally, in its key North American market, Facebook saw monthly users decline slightly.
The stagnant user figures raised concerns about the company’s ability to grow even as more bad news poured in from its advertising business, which generates the overwhelming majority of the company’s profits.
Last year, Apple changed the privacy setting on its iPhones and other devices, requiring apps, including Facebook, to get each user’s explicit permission to track their activity on the internet. Prior to that change, Facebook had made extensive use of tracking software to deliver targeted advertising to its users — something its advertising clients were willing to pay a significant premium for.
Since Apple instituted the change, the majority of users have declined to allow Facebook to track their browsing, greatly diminishing the company’s ability to target advertisements. On Thursday, Meta Chief Financial Officer David Wehner told investors the company expects the changes to cost it $10 billion in advertising revenue in 2022.
My personal take is Facebook is stale, its platform is now overcrowded and there are more automated posts or posts by bots then actual users sharing life happenings. Facebook has now become a depressing place, inundated with “agenda” based postings to drive an emotional response from the user.
Unfortunately, most of the times if not all, that emotional response is based on negative emotions. As we learnt from whistleblower testimonies to congress last year that anger and hate results in more and deeper engagement.
I think that is not the only challenge, Facebook is now out of touch, it’s look and feel are not inviting, its massive drain on the battery on the mobile version and now with Apple’s tracking restriction it cannot do what it did best – stalk its users and play with their emotions. It was a product designed in the 2000s for the people who grew up in the 90s and came of age on AOL (America Online).
Facebook has long struggled to attract younger users to its platform, and on Thursday, company officials admitted that the firm is finding it difficult to compete with TikTok, an app created by the Chinese firm ByteDance, which allows users to share brief videos.
To address this Mark Zuckerberg CEO of Meta (the newly renamed Facebook) said the company’s answer to TikTok is a service called Reels, is still being developed. Imagine that, Facebook who was trend setting a decade ago is trying its best to copy one of its competitors – “trying” being the operative word.
Does the Facebook share price drop means that its all game over for Meta and Zuckerberg? It is a bit hard to answer and make prediction at this time. It is for certain to say that Facebook is having it’s Apple moment, when the trend setter’s product became stale and those who came later became number one.
The one fundamental difference between Apple and Meta is that Steve Jobs was a visionary and innovative leader who was passionate about his product and the users who used them. Mark Zuckerberg is neither visionary nor does he care about the users that he serves.
For those who would want to argue that Facebook is visionary, I would want to remind them that Facebook was someone else’s idea stolen and Geo Cities and My Space had existed long before.
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