Metaworse: Facebook falters

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By now you've probably seen that the artist-formerly-known-as-Facebook has had a rough week, notching up the biggest one-day loss of value in the stock market's history.


Meta's 2021 revenue was up 37% on last year, and the company delivered a cool $47bn of operating profit — so you'd be forgiven for wondering why investors wiped ~$230bn of value from the company.

In short, Meta has a few problems:

  • Apple's privacy change: Targeted advertising has gotten more difficult since Apple's new tracking update, making Facebook ads less effective, and hurting demand.
  • TikTok: Facebook is losing users, particularly younger users, to TikTok. The core Facebook platform lost daily active users for the first time ever.
  • The metaverse isn't here yet: Reality Labs, Facebook's augmented and virtual reality division, is a big cash sink, and will likely remain so for a while.

The last one Facebook can at least do something about — and Zuckerberg is spending big ($12bn+ last year) to get the Metaverse here as soon as possible. The question is, how long until it becomes a significant business? It's anyone's guess, but judging by the stock's reaction yesterday, investors aren't feeling patient.

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