In its fourth quarter 2021 financial report, Meta, the parent company of Facebook Inc. disclosed that’s monthly active users declined. While that was not the only bad news in the report, Facebook reported that its revenue dropped by whooping $10 billion. The news of the negative report sent out shockwaves across Wall Street and the global financial markets.
To summarize the significance, shares of Facebook dropped 25% at one point, taking $240 billion off its market value, which in turn led to a 2% drop in the Nasdaq index.
However, apart from the scare it caused on Wall Street, the report is very instructive to the global media and advertising industry. This is because TiKTok, a video sharing app giant and a small rival of Facebook is now leading and making more revenue than Facebook from video formats. Another dimension was the critical effect of the iOS App Tracking Transparency (ATT) restrictions on Facebook and its audience targeting efficacy. While this had less negative impacts on its competitors such as SnapChat and even TiKTok, the company’s revenue is expected to further dip in coming quarters as more iOS and Apple users activate the feature. With little or no plan on how the company plans to recode its cookie scripts and wean it from its eavesdropping nature off the platform, it is obvious that Meta could be at its wits end on how to ‘make things right’.
These developments proves Facebook could lose its position as the bellwether platform for driving effective reach and video engagements. However, it doesn’t in anyway invalidates the strength of the Metaverse thesis, perhaps, it only questions the leadership of Facebook in this futuristic run of play.
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