MENLO PARK, Calif. - Facebook's daily active users dropped by roughly 1 million last quarter — a first in its history.
Facebook parent company Meta posted a weak fourth-quarter earnings report on Wednesday due to a sharp increase in expenses. Forecasting revenue for the current quarter — which fell below analysts’ expectations — also sent its stock plunging 24.5% on Thursday, erasing more than $220 billion in market value and marking the largest drop in history.
The fourth-quarter earnings report also revealed a drop in its daily active users (DAUs) — or the total number of people that engage in some way with the product on a given day.
The social network’s daily active users fell from 1.93 billion in the third quarter of 2021 to 1.929 billion in the fourth, which a company spokesperson confirmed is the first quarter-to-quarter decline for the app in the company’s history.
Facebook's daily active users rose 5% in 2021 compared to the year prior, while monthly active users increased by 4% in the same year-over-year period.
CEO Mark Zuckerberg warned of slowing revenue growth due in part to increased competition from TikTok and other rival platforms vying for people’s attention. The newly renamed Meta has invested heavily in its futuristic "metaverse" project, but for now, relies on advertising revenue for nearly all its income.
With more choices for how people can spend their time, Zuckerberg conceded that competition remains one of the major impacts on the business. He told investors that the company expects "continued headwinds from both increased competition for people’s time and a shift of engagement within our apps" towards products like Instagram Reels, a short-form video feature that resembles TikTok. These products are harder to monetize than Facebook’s News Feed and Stories, he added.
But Zuckerberg noted that Reels is among the company’s "investment priorities" for 2022.
"It’s clear short-form video will be an increasing part of how people consume content moving forward, and Reels is now our fastest-growing content format by far," he said.
Meanwhile, Sheryl Sandberg, Meta’s chief operating officer, said that global supply chain issues, labor shortages and earlier-than-usual holiday spending by advertisers have put pressure on the company’s advertising sales.
Recent privacy changes by Apple also make it harder for companies like Meta to track people for advertising purposes, which further puts pressure on the company’s revenue. For months now, Meta has been warning investors that its revenue can’t continue to grow at the breakneck pace they are accustomed to.
Zuckerberg’s personal net worth also took a nosedive this week after Meta’s stock tanked. Over $29 billion was shaved off his personal fortune of around $88 billion, down from $114.4 billion before the slide, FOX Business reports.
Meta had somewhat of a tumultuous end to 2021, which included whistleblower Frances Haugen testifying to Congress that the company and its products harm children and fuel hate and misinformation in the U.S. Haugen, a former Facebook data scientist, also told lawmakers that company leaders refuse to make changes because of a desire to put "astronomical profits before people."
In October, Facebook Inc. launched a rebrand and changed its name Meta Platforms Inc., or Meta for short, to reflect its commitment to developing the metaverse. Zuckerberg has described it as a "virtual environment" you can go inside of, instead of just looking at on a screen.
People can meet, work and play, using virtual reality headsets, augmented reality glasses, smartphone apps or other devices. It also will incorporate other aspects of online life such as shopping and social media, according to Victoria Petrock, an analyst who follows emerging technologies.
Meta invested more than $10 billion in its Reality Labs segment — which includes its virtual reality headsets and augmented reality technology — in 2021, contributing to the quarter's profit decline. It expanded its workforce by 23%, ending the year with 71,970 employees, mostly in technical roles.
It similarly announced plans to hire 10,000 workers in the European Union over the next five years to help build "the metaverse.
This story was reported from Cincinnati. The Associated Press contributed.