Meta shares take an unprecedented beating as Facebook loses followers for the first time

The rise and rise of Mark Zuckerberg-led Facebook were stopped in its tracks by an unprecedented and unexpected fall in its daily user numbers, which led to a dramatic fall in the share price of the recently renamed company that now goes by the name of Meta. Facebook shares fell by a sizeable 25% on Thursday, in the process wiping off a whopping $200 billion in share value.

To get an idea of the enormity of this occurrence, that is more than the market value of McDonald’s. The fall in the share value of the company came on the back of the announcement by Meta that the daily active user numbers fell by a significant one million users(1.93 billion to 1.929) billion. This news sent shock waves amongst investors as Facebook’s revenue model is driven by its humongous user base and any chinks in that strikes at the very roots of its success.

Zuckerberg acknowledged the challenge posed by competitors like Tik Tok, which is something that Facebook was hitherto not much affected by as it used its might to dominate the industry like nothing the world had ever seen before. The massive $10 billion spent by the company in advancing its vision of the metaverse and tougher competition from rivals and changes in consumers ‘engagement patterns were other headwinds that the business faced. 

The troubles faced by Facebook are in conformity with a trend that has impacted technology companies like Netflix and PayPal in the aftermath of the high growth they witnessed during the pandemic.  Even though Meta’s revenues for the previous three months exceeded expectations at $33.7 billion, the fall in daily active users is a sign of possible turbulence ahead.