Meta shares fell by more than 20% on Wednesday, wiping more than $240 billion off the value of the company after it published weaker-than-expected earnings, even weaker forecasts, and statements by Mark Zuckerberg which show the company is extremely worried about the competition:
“People have a lot of choices for how they want to spend their time and apps like TikTok are growing very quickly.”
Most analyses of today’s events point to factors that go beyond the merely cyclical: this is a company that is no longer growing, whose number of users is falling for the first time in its history, and above all, is 98% dependent on revenue from advertising, which now faces tighter restrictions.
At the same time, Apple’s focus on privacy, which now allows users to reject tracking by applications means Facebook no longer has access to the data of a large percentage of its users, reducing the company’s ability to continue offering its real customers — advertisers — ultra-targeted advertising.
Facebook has known for some time this was coming, but to make matters worse, the European Parliament looks set to prohibit hyper-segmented advertising targeting young people and other demographics, a move the United States might follow.
