Facebook reported the first quarterly decline in daily users in the company’s history this week, causing its stock price to plummet by a whopping 23% over the course of intraday trading on Thursday. The massive drop represents a $200 billion market value loss for Zuckerberg and his shareholders.
This week, the Verge reported that Facebook saw its first-ever daily user decline after years of steady increase and growth. The company had no reason to expect a loss in growth and was taken by surprise by the sudden downturn.
On Thursday, Facebook CEO Mark Zuckerberg was made to confront the fact that his company, now renamed Meta, had peaked on user growth, and showed flatlining across its many platforms like WhatsApp and Instagram. The $200 billion loss came as a surprise for the young CEO as well. Facebook is also reeling after discovering that 1 million daily users from North America have ditched the site.
Nearly all of Facebook’s advertising profits are made off of North American users, so the dramatic loss of 1 million in the region is a worrisome trend for the company. The loss of users signals an overall decrease in daily Facebook users globally, which according to a company spokesperson, is the first sequential decline in the company’s history.
As a matter of perspective, Facebook’s daily users dropped from a previous 1.93 billion to 1.929 billion, hardly rendering the company unprofitable. In fact, the company raked in a full $40 billion worth of profit last year alone but is also spending billions of dollars on projects like Reality Labs, the division which is responsible for creating the Quest virtual reality headset.
Facebook is betting large on the metaverse, with rebranding initiatives and plans for a whole new generation of internet connection, experienced primarily through virtual reality. Consequently, the company has started investing large in VR headsets, software, and AR glasses. The Reality Labs cost the company about $10.2 billion last year alone, with reported revenue of $2.3 billion.
On Wednesday’s earnings call, Zuckerberg claimed that the upcoming headset is scheduled to come out in late 2022, and will be priced at the “high end of the… spectrum”
Author: Jim Drake