(UPDATE) Facebook lost daily users for the first time in its 18-year history in the final quarter of 2021, which CEO Mark Zuckerberg believes was caused by the TikTok boom.
The social media giant’s devastating earnings report on Wednesday sent Facebook shares plunging more than 20 percent, wiping more than $200 billion off the company’s market cap and erasing $29 billion from Zuckerberg’s net worth. Facebook reported a drop of nearly 500,000 in daily logins during the last three months of 2021.
‘People have a lot of choices for how they want to spend their time, and apps like TikTok are growing very quickly,’ Zuckerberg said during an earnings call Wednesday, according to the Washington Post. Zuckerberg reiterated that Meta – the company that owns Facebook, Instagram, and WhatsApp
– is pushing hard to develop its short-form video Reels in an effort to compete with TikTok. Still, analysts were bleak in their assessments, pointing out that Meta faces stiff competition from rivals like Tiktok and revenue was far lower than expected. Michael Nathanson, an analyst at brokerage Moffett Nathanson, titled his note “Facebook: The Beginning of the End?”
“These cuts run deep,” he wrote. The results were “a headline grabber and not in a good way.” The sheer size of Facebook’s collapse illustrates just how tech companies have ballooned in size to become behemoths with unprecedented market power, and the drama that can ensue when they stumble. “Lots of U.S. megacaps are priced as growth stocks. They may suffer more in a rising yield environment, especially if growth becomes more questionable,” said Frederic Rollin, senior investment advisor at Pictet Asset Management.
