Facebook is falling from the stratosphere. Mark Zuckerberg has slipped, too.
Facebook’s rocketing growth rate has sputtered. And some investors are bailing, as reflected in a stock price decline of at least 25 percent on Thursday.
For the first time, Facebook is losing users, The Daily Mail reported. It shed a million people from the third to four quarters of 2021, dropping from 1.93 billion to 1.929 billion users, according to Jeremy Bowman, contributor to the stock advisor Motley Fool.
“Facebook’s user base is massive,” Bowman said. “About half of the world’s population uses one of its apps every month.
“But the sudden slowdown in user growth reflects more than just the business’s maturity. Competition from entrants like TikTok, as well as a possible COVID-19 hangover, seem to be affecting growth.”
Facebook founder CEO Mark Zuckerberg, who personally suffered a paper loss of $29 billion Wednesday and another $2 billion Thursday in the stock price drop, confirmed serious competition from TikTok.
“People have a lot of choices for how they want to spend their time, and apps like TikTok are growing very quickly” Zuckerberg said at Wednesday’s fourth-quarter conference call aimed at investors, analysts and media.
Facebook, through its parent company Meta, is heavily investing in Reels, a short-form video service aimed primarily at young adults, Zuckerberg said.
But current and expected future growth are what are plaguing Facebook, according to Bowman, noting that management is predicting revenue growth between 3 and 11 percent in the first quarter of 2022, down from its routine 20 percent growth rates.
The loss of users was “the most alarming data point” for last quarter, Bowman said. “That’s the first sequential decline for the key metric ever.”
Significant to Bowman was that in addition to long-stagnant growth in North America and Europe, there was a plateau in expansion in the Asia-Pacific region and the rest of the world.
And, he said, Facebook might be wasting money on investing in virtual and augmented reality projects, something Zuckerberg has advocated,
For his part, Zuckerberg conceded in the earnings call that Facebook also has been hurt by changes in Apple’s ad tracking. And Facebook going wobbly bumped Zuckerberg out of the world’s top ten in wealth, dropping him to No.13. As of Friday morning, that position stemmed from a net worth of nearly $83 billion, according to the Daily Mail.
With 398 million shares of parent company Meta, Zuckerberg’s 12.8 percent stake in the company took a big hit with the more than $237 billion loss in market capitalization as of Thursday. Just a few days ago Zuckerberg was the eighth richest man in the world, the Daily Mail reported.
But why are people leaving Facebook? A million is a million and that’s a substantial loss, even for a company like Facebook that still has 1.929 billion pairs of eyeballs for advertisers to sell to.
Is Facebook getting old, indeed being replaced by TikTok? True, obviously, for younger users. But Facebook is recognized for having an older audience. What’s happening to them?
Could it be they are fed up with ongoing complaints about censorship?
Controversial commentators are being put in Facebook “jail” or are being told their posts are going to lower priorities. Say anything — anything! — about COVID vaccines and Facebook will adorn your post with an advisory urging viewers to get the alleged facts about COVID shots.
Recently there was a funny post about how different breeds of dogs might describe changing a light bulb. Thankfully, the poster also included a response by a cat; otherwise, at the rate things are going, Facebook might launch an advisory scolding about lack of inclusion of the feline community.
There is a concept called the product life cycle (and it applies to businesses in general, non-profit organizations, churches and perhaps republics). There is the introduction of the product; it grows and becomes successful; it matures as competitors catch up with it somewhat. Then it goes into decline and dies.
While Bowman thinks Facebook’s sluggishness reflects a problem with competition rather than the maturing of the product, perhaps Facebook is suffering from ignoring what its customers want — things like freedom of thought and freedom of expression.
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