Meta’s market value plummeted by 1.5 trillion. One of the reasons is that it can’t beat TikTok? via /r/wallstreetbets #stocks #wallstreetbets #investing


Meta’s market value plummeted by 1.5 trillion. One of the reasons is that it can’t beat TikTok?

Recently, Meta announced its first financial report after its name was changed, followed by a “Tragedy” in which the share price plunged by 26.39%.

Under the share price collapse, Meta’s market value evaporated $237.6 billion.

According to the financial report, Meta’s revenue in the fourth quarter was US $33.671 billion, a year-on-year increase of 20%; The net profit was US $10.285 billion, a year-on-year decrease of 8%.

In fiscal year 2021, Meta’s “reality labs” business had an operating loss of $10.193 billion and a revenue of $2.274 billion.

Throughout the weak performance of Meta in the fourth quarter, there are three main reasons.

First, the privacy policy changes of platforms such as Apple and Google have a huge impact on advertisers’ income.

On April 27, 2021, Apple IOS 14.5 was officially released, accompanied by the strongest privacy rules in Apple’s history. Under this privacy rule, if the app or company wants to stay on the IOS system, it must study its own attribution scheme and cooperate with Apple’s skadnetwork for technical docking.

After the introduction of the new privacy policy, advertisers face two challenges. First, the accuracy of advertising positioning decreases and the cost of advertisers increases. Second, it is difficult to measure the effect of advertising.

This also means that under the shackles of Apple’s new privacy policy, many of Meta’s revenue businesses will also be affected to a certain extent.

Second, Metaverse‘s business is still in the money burning stage, and its contribution to Meta’s income is limited, which will even drag down the development of overall performance for a long time.

Zuckerberg also warned of this situation. In July 2021, Zuckerberg mentioned in his vision description of Metaverse that “in the next three years at least, Meta’s Metaverse business needs long-term capital investment, and the possibility of profit is very small, which will compress Meta’s profit space and put pressure on meta’s cash flow.”

The release of the four seasons newspaper mentioned that Meta’s “Metaverse” strategy is in continuous loss. The development department realitylabs had a revenue of less than $2.3 billion in 2021, but a loss of more than $10 billion. It is the loss of this department that has dragged down Meta’s overall profitability.

Third, the growth of Facebook users in Meta’s traditional business stagnated, facing the impact of competitors represented by tiktok.

According to the financial report, Facebook has 1.93 billion live users in the four seasons, a year-on-year increase of 5%, but lower than the 1.95 billion expected by the market; Monthly live users reached 2.91 billion, a year-on-year increase of 4%, lower than the 2.95 billion expected by the market.

It can be seen that the growth momentum of Facebook’s number of users is obviously insufficient. An important reason is that short video products seize the users of traditional social products.

Among them, TikTok poses the greatest threat to Facebook. Zuckerberg admitted on the earnings conference call that “TikTok is such a powerful competitor that it can continue to grow at a fairly fast speed on the basis of having a large user base”.

Rich Greenfield, a partner of lightshed, a consulting firm, said frankly that meta is facing a life and death threat from TikTok.

In fact, the “catch-up” between TikTok and Facebook began as early as 2017.

In November 2017, byte beat acquired music, which Zuckerberg spent six months still unable to reach Ly, accompanied by musical More than 200 million users of the ly platform, as well as the accumulation of technologies, products, operations and other capabilities, are all incorporated into TikTok.

The rapid trend that TikTok has maintained since its launch has also triggered frequent “provocations” by Facebook.

During the sale of TikTok in 2020, Zuckerberg repeatedly “instigated” TikTok to the local regulatory authorities that there were various unsafe vulnerabilities and data disclosure behaviors, so supervision should be strengthened.

At the same time, when tiktok fell into the dilemma of “blocking”, Facebook quickly increased its investment in instagram and launched reels, a short video function with 15 seconds or 30 seconds, copying the short video playing methods and functions similar to TikTok, waiting for the opportunity to seize the market.

However, in this battle after battle, tiktok still strongly maintained its top position in the industry, and even jumped to the top of the global list of popular mobile app downloads.

Last September, TikTok announced that its global monthly active users had exceeded 1 billion, and it took only four years to achieve this feat. Facebook, as the global social overlord, spent eight years.

According to the mobile app report for the fourth quarter of 2021 released by sensortower, TikTok’s download volume ranks first in the world of mobile app, maintaining an overall leading position in 2021.

To sum up, Meta is indeed in danger and in a dilemma. On the one hand, the advertising revenue is hit by the privacy rules of IOS platform. On the other hand, the Metaverse business is in the early stage of development and has little contribution to revenue in the short term.

The biggest threat is the rise of TikTok in the world. The rapid development of the latter further highlights the decline and dilemma of Meta, the global social overlord.

Maybe the grand vision of the Metaverse described by Zuckerberg will eventually come, but before that, meta still needs to free up more resources to resist the challenge of TikTok.

After all, Meta has to consider the current “threat of life and death” before telling the story of the distant Metaverse.

Submitted February 08, 2022 at 09:49AM by lilyxu185
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