Facebook’s historic plunge and the failing bet of Metaverse!

Just Logically Speaking
5 min readFeb 10, 2022

Last week Social media giant, Facebook lost about $230 billion in value in a single day, in what was the biggest market drop for an U.S stock in history. Mark Zuckerberg, himself lost out on about $30 billion of his net worth, pushing him down on the global billionaire’s list. It seems like Facebook’s problems are running in an never ending loop. The recent rebranding of the company into “Meta”, or in general to the so called “Metaverse” has also not yielded much positivity in the company’s fortunes.

While the plunge might seem like an temporary market sentiment, it definitely raises concern over the future of the social media giant. After all the last 6 months have been awfully tough for the company. Lawsuits, allegations and controversies, Facebook has seen it all. Which brings us to the question of, Has Facebook already peaked its success, its limits? And would the Meta rebranding save the sinking ship?…..

The reason behind this historic dip

Last week on Thursday, Meta reported a decline in profits and daily users during the last quarter of 2021. And the grim part is that the forecast revenue for the current quarter isn’t that great either. The news spread like a wildfire across the market on Thursday, as Meta was left with about $230 billion wiped out from its market cap. Within a single day, the company lost its market capitalization of $898.5 billion to $661 billion. Facebook saw an average decline in its daily users for the first time in its entirety from 1.93 billion daily users in the last quarter to 1.929 billion users in the present quarter.

The company has been plummeting for some time now, thanks to internal reports that suggest the company’s practice of promoting polarizing contents that spread hate speech and misinformation among its users, for the sake of profits. The company has been bleeding money since its ascension as a Trillion dollar company, last summer. Experts have speculated, that the rapid rebranding of the company is a desperation move to drive-off the attention from the real internal issues inside the company.

Zuckerberg blames Tiktok and Apple for the company’s recent woes

Zuckerberg, CEO of Meta emphasized on the fact that stiff competition from rivals and new iOS policies are mainly the reasons behind the company’s recent decline in users and profits. Among all, he mentioned the viral short-video platform “Tiktok” as the company’s biggest competitor. Apart from the competition, the new iOS user policies by Apple is causing significant losses to Facebook. The company has estimated that Facebook might loose as much as $10 billion in 2022 due to the new Apple policy. Apple has recently launched App Tracking Transparency (ATT) functionality, which required apps to ask users for their permission before tracking them on apps and websites visited by them. The users on the other hand would have the liberty to simply deny such permissions, and get-on with their business.

The thing is that the entire business model of Facebook is based around advertisements and ad-revenue is its largest source of income. With the new iOS policy, companies like Meta would find it difficult to collect the huge resource of advertising data, it had access to earlier. Hence, it would become even more difficult to produce relevant ads to its users. Which in turn would hamper the ad-revenues of the social-media giant.

The Metaverse bet isn’t either doing wonders for the company

Facebook has a huge stake in the Metaverse, with it being one of the earliest companies to invest in this technology. The company is pretty bullish when it comes to Metaverse and things oriented to it. Last October, the company went on a full-scale rebranding, naming its parent company as Meta. Reality Labs (a company founded and owned by Mark Zuckerberg), the company responsible for the creation of augmented- and virtual-reality-related consumer hardware, software and content is incurring huge losses. The division has reported a loss of about $10.2 billion in 2021, which is more than double the losses for the previous year of $4.62 billion.

But exponential losses have done little to stop the company from investing further into the Metaverse. The spending’s have only increased overtime, with reports of Reality-Labs expenses skying upto more than 45%. Zuckerberg has already announced that Meta would be releasing a high-end V-R headset, sometime this year. And would continue to develop Project Nazare, which is Meta’s first fully Augmented-Reality glasses.

Facebook’s popularity is evaporating

Facebook which started as a social media for University students and teens, now seems to struggle for existence among that very generation. The company’s own research paper has shown that the social-media giant has been facing demographic problems. According to the paper, Facebook has been losing out on its daily-teenage and young-adult users since 2012. But the problem has grown out to be more serious recently. And the company is pretty desperate to turn things around.

In March 2021, a research was conducted by data scientists at Facebook evaluating Facebook and Instagram usage among teens and young adults. This was the time when Facebook was increasing its user-base rapidly, but was losing out on engagements in key markets, like U.S, Australia and Japan. The presentation showcased how young adults had started to perceive Facebook’s contents as boring, misleading and negative. There were also additional concerns about data privacy and general wellbeing of the society. The study also claimed that “New Account Registrations for users under 18, had fell to about 26% from the previous year, in the company’s top 5 countries. The entire presentation summarized the fact that the average Facebook user-age has been increasing over time. And continuity of this process might widen the gap between the company and its young users even-more.

The Principal author of the blog Just Logically Speaking, Susanta Ray is an enthusiast for information and learning. He thrives in subjects related to Modern Technology, Science, History, Space, Finance and Global Affairs.

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