Meta lost over 30% of its value in one month
…and over 26% of that value was lost in one day! (that’s about 237 BILLION)
How can this happen and is this the end for Facebook?
Here are the reasons outlined in the media:
- Drop in daily users – they lost about 500,000 daily users in Q4
- Competition from TikTok
- Apple’s new privacy policies that forbid apps to track users without their permission.
And 4 more reasons that they won’t disclose publicly
- Meta’s negative impact (on humanity ) – they knew and they did nothing.
- The launch and reliance of Horizon Worlds, their version of the Metaverse
- Lawsuits, oh the lawsuits – FTC and Australia
- Europe’s ultimatum – put servers on our soil or get out!
- Drop in daily users – they lost about 500,000 daily users in Q4
Facebook’s business model is rooted in the growth of active daily users, daily users load pages, and pages sell ads. With a business model reliant on ad sales, this decrease could represent the beginning of the end. But why, why are there fewer daily users? Facebook’s mission statement is:
“to give people the power to share and make the world more open and connected”
Facebook Mission statement
So – let’s take a look at what Facebook users are sharing – here’s a list of their top performing link posts (Feb 7, 2022):
7 out of the 10 top performing links connect to sensationalistic journalism (at best) and divisive hate fuelled commentary (at worst), with a splash of end-of-time, rapture foreshadowing. Perhaps Facebook figured that connecting people by stoking fear and political outrage would make the world more “open”. Open to Russian interference, open to sedition, open to outrage…
But why did their daily users go down in Q4? Maybe people needed a break from being angry all the time, or maybe a few of them wanted to see what life would be like outside of the right-wing echo chamber? Maybe people started to see Facebook for what it is – a hate-maker and they decided it was time to #deletefacebook. #4 of this article expands on this theory.
- Competition from TikTok
It’s odd that the CEO of Meta points to the strength of another platform as their weakness. It signals such defeat…”sorry guys, the other company is so much better than ours, that’s why we are losing users”… but, Zuck isn’t stupid – he knows that the government isn’t happy about how Meta platforms are harming the populace and he knows that they are looking into ways to fix the problem. By stating that TikTok is one of the reasons they lost users, Mark Zuckerberg is artlessly trying to throw shade on the big bad Chinese company in the hopes that it will take the governments spotlight off his destructive platforms*.
3. Apple’s new privacy policies that forbid apps to track users without their permission.
Facebook, much like every other app offered in the Apple App Store just learned a valuable lesson about owning the rails. If you don’t control the infrastructure that supports your app, then you really don’t own anything.
You’ve got to own the rails.
Tim Cook has never been impressed with Mark Zuckerberg’s business ethics, especially when it came to how it handled the Cambridge Analytica scandal and 2016 election. Cook saw inherent flaws on how Facebook handled data, and took aim at Facebook and its younger leader. Apple also saw Facebook’s data failures as a great opportunity to develop a distinct market advantage – asserting in 2015 that:
“Privacy is a fundamental human right.”
Tim cook, 2015
Apple’s focus on privacy resulted in the creation of policies that gave more control to consumers culminating in the April 2021 update that made it very easy for customers to block all data harvesting from apps on their phones. Now, Meta is “facing” the consequences.
But wait – could these three reasons really be the reason for Meta’s incredible downturn? Investors are called sharks for a reason, they can smell when there is blood in the water…and with Meta’s PR missteps – they have had a feast. Once the darling of Wall Street, now Meta can’t seem to get any of their calls returned.
Meta has sunk into new territory; with a price per earnings ratio of 16.33 for a tech stock, (Alphabet currently has a P/E of 24, Apple P/E of 28.5), the Meta stock continues to plummet, due in part to the reasons outlined above, BUT, even more likely due to the following four very big missteps.
4. Meta’s negative impact (on humanity ) – they knew and they did nothing.
Frances Haugen was launched onto the international stage sharing with the world how Facebook knew that Instagram was harming younger teens but did nothing about it. She also highlighted how Facebook profited from distributing false conspiracy theories and lies that led to empowering authoritative regimes globally and increasing domestic terrorism. You would hope these revelations would encourage Facebook to show some humility, that they would be the impetus to create various ethics and misinformation committees that were charged to understand the issues and address them with updated policies and stronger oversight. Instead they tried to smear Frances Haugen’s name and offered weak rebuttals that sounded more defensive than conciliatory.
5. The Launch of Horizon World, Facebook’s Metaverse app. When a $935.64 billion company invests 10 billion dollars in a brand, the PR should at least be watchable.
In late October, probably when they started to notice their daily users dropping (potentially) due to the aftermath of Frances Haugen’s testimony, Meta panicked and realized they needed to present a new version of the company to people. The Metaverse was the perfect vision to pivot the company away from their soul-sucking social quagmire into a new reality – a reality that they hoped would not only continue to support Meta’s meteoric rise in the stock market, but also to one where they would own the rails.
With the top PR and marketers in the country colluding together to “make Meta great”. I wonder how long it took them to suggest that Mark Zuckerberg should be its spokesperson. I suspect they had several good ideas that were shot down before some bright spark, at a loss for what to do, decided to try the oldest trick in the book – flatter the CEO:
“Why Mark – you should be the spokesperson for the Metaverse – you are the inventor of it**and you are so passionate about it.” (he’s not**)
Flattery gets you everywhere and they didn’t have a lot of time to devote to this calculated distraction so, much like the avatars on the Metaverse platform, Mark Zuckerberg did his best to portray human emotions while frenetically pitching his new reality.
I have never been able to listen to the entire pitch, there is something inherently off putting about his voice, tone, enthusiasm…
Then I think back to this picture he posted on Instagram on July 4th – the instant meme, and wonder, did his high priced marketing and PR team think he somehow gained likability from this bizarre photo?
Do they never go on Twitter or read the comments in Instagram?
Mark being the face of the new metaverse is comparable to Randall Meeks being the official spokesperson to Google Glass.
Not to harp on their marketing strategy too much but when one of the board of directors thinks this is a good look:
Facebook’s metaverse potentially could save Facebook, but I think they will need to fundamentally change their marketing strategy.
6. Lawsuits, oh the lawsuits – FTC and Australia
The Federal Trade Commission lawsuit to break up Meta (force the sale of Instagram and WhapsApp) has been given the green light as of January 11, 2022.
Facebook lost its appeal to have the Cambridge Analytica lawsuit dismissed in Australia, which confirms that they did indeed collect Australians personal information. There is a parallel lawsuit filed by NdCal as well.
7. Europe’s ultimatum – put servers on our soil or get out!
Meta, not realizing how much their stock would crater after their last earnings call boldly stated that they may pull out of Europe if the European Commission enforces the data transfer ruling that prohibits Meta from transferring data across the Atlantic. At this point Meta needs Europe a lot more than Europe needs Meta.
Meta plays by their own rules and tries to distract and obfuscate the damaging effects of their platforms with high priced marketing and PR campaigns instead of putting their big boy pants on and owning up to their mistakes. It’s time to hit them where it hurts them the most – their valuation, and show the unrepentant tech giants that the world is watching.
Notes/Sources
*He does have a case though, it doesn’t seem fair that a Chinese company can play in the American garden when American companies have been kicked out of China. But that shouldn’t stop Meta from being investigated and forced to adjust their business strategy in order to limit harm to their users. And, the US should create rules around TikTok’s platform, and all social media platforms, to ensure that they are not contributing to the decline of civil society.
**https://www.theguardian.com/technology/2021/oct/28/facebook-mark-zuckerberg-meta-metaverse
https://www.apa.org/monitor/2022/03/feature-minimize-instagram-effects
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