Investors wiped almost $200 billion from the market capitalisation of Facebook owner Meta Platforms as it warned that its first-quarter revenues would fall short of Wall Street expectations because of increasing competition.
The company’s Frankfurt-listed shares plunged more than 20% on Thursday, following a slide on the Nasdaq of more than 22% in after-hours trading on Wednesday.
“People have a lot of choices for how they want to spend their time, and apps like TikTok are growing very quickly,” Mark Zuckerberg, chief executive, warned on a call with analysts.
The competition would put short-term pressure on Meta’s advertising business, he added.
The latest evidence that Meta was losing the “attention battle” came a day after its rival, Google parent Alphabet, posted an unexpected surge in advertising revenue.
Facebook’s parent firm Meta on Wednesday delivered a gloomy mix of a sharper-than-expected drop in profit, a decrease in users and threats to its ad business.
Already jittery markets have punished pandemic-era darlings including Netflix for disappointing results, with Meta getting a taste of that after its $10.3-billion quarterly profit and daily user-growth fell short of expectations.
Its signature Facebook platform also reported losing roughly 1 million daily users globally between the last two quarters of 2021 – a tiny number on an app with nearly two billion daily users, but a potentially worrying signal of stagnation.
CFO Dave Weiner told analysts that user growth was impacted by “headwinds” including disproportionate growth in the Asia-Pacific during the pandemic that has slowed and an increase in mobile data prices in India.
“In addition to these factors, we believe competitive services are negatively impacting growth, particularly with younger audiences,” Weiner added.
The company’s executives have repeatedly referred to competition from TikTok but also from other networks, while they face numerous probes and complaints of abuse of dominance.
Analysts expected 1.95 billion daily active users on Facebook, but Meta reported 1.93 billion – a key indicator of the growth trajectory for a company fueled by the people who choose to interact with its platforms.
On the financial side, Meta achieved a turnover of $33.67 billion, in line with its forecasts, but it made $10.3 billion in net profit in the fourth quarter, 8% less than last year.
- AFP, with additional editing by George Russell