Meta sinks in the stock market, victim of a perfect storm

Meta

opened the stock market today

, when the company was still called Facebook and seemed to have a huge future ahead of it.

A 20% drop in the share price following the release of the latest quarterly data has wiped out all the gains since then and shown that some tech giants do indeed have feet of clay.

It is not being a great year in general for technology companies.

They rose through the roof during the pandemic and now show hangover symptoms.

But the case of Meta, which in addition to Facebook

, is especially serious.

Those who bought shares in January of this year are already losing almost 70% of their investment.

Meta itself is about to drop out of the list of the 20 largest US companies.

The figures for the third quarter, the truth,

.

In a year, half of the profits have evaporated.

Last year, at the end of the third quarter, the company claimed to have earned about 9,000 million dollars.

This year the figure barely exceeds 4,390 million,

.

Earnings per share have fallen 49% despite the company's revenue being relatively stable, down just 4% which can easily be blamed on the general economic climate.

Mark Zuckerberg, founder of the company, has asked investors for patience.

"I think those who are patient and invest in us will end up being rewarded," he asked almost as an exercise of faith in the call with analysts after the release of the accounts.

THE PERFECT STORM

The reality is that getting out of the quagmire in which Meta finds herself is going to be complex, because there are several forces acting against her.

The problems started, believe it or not,

.

Late last year, Apple introduced new privacy controls on iPhones that allow users to limit the amount of information that apps on their phones are capable of extracting.

Until then, Meta relied on its digital omnipresence to create

.

It collected information not only about the use made of its own applications, but also many others in which it included tracking codes.

This allowed him to be very effective - and therefore charge more - in the online advertising business.

But with the new changes it has lost a huge competitive advantage in its most important market, the US, where the number of people using iPhones is very high.

It also doesn't help that Google has decided to follow a similar path with Android, increasingly restricting the amount and quality of data it shows developers unless users explicitly opt in to share it.

The other problem for Meta is that he has decided to bet his future on only one card:

.

Last year she announced her name change, justifying it as a better reflection of her intentions.

Zuckerberg believes that in the near future most of our digital lives, both at leisure and at work, will take place in virtual environments, something that, together, he calls "the metaverse", hence why we now talk about Meta instead of Facebook.

Without control over mobile phone platforms, Zuckerberg's strategy looks solid.

The metaverse is still to be built and if Meta gets ahead of the rest it

, the position that it would have liked to have in the smartphone and which seven years ago seemed to have the possibility of opting for given the importance of its features . social networks.

This bet, however, is expensive and will not produce results in the short term.

Although Facebook has just launched new virtual reality headsets to support its intentions, the use of its virtual worlds remains very sporadic, even among Meta's own engineers, who have orders to lead by example.

Driven by the need to hire more employees for this project (at a time when labor is in short supply and labor in demand), Meta fears that this year's operating expenses

.

In 2023, they will rise even higher, to $101 billion.

TIKTOK

As if those two elements weren't enough, Meta also faces an additional problem.

Although the number of users continues to grow - around 4% in the last year, according to the breakdown in the latest financial results -

.

Facebook had already lost some of its growing and less active audience to Instagram.

It was not a problem because everything was, in the end, at home.

But now, the same phenomenon is happening with this social network.

The new generation of Internet users seems more interested in TikTok videos or Twitch live streams than in the

that have so far dominated digital culture.

Meta has tried to react by copying the same features and integrating them into Instagram, but it's still too early to know if it will be enough to stop the bleeding of users.

Zuckerberg assures that the number of active users on Instagram

and that Reels, which is how the function that imitates the style of TikTok videos is known, is increasingly popular, but analysts believe that it will take at least least 18 months to offset losses from other Meta properties.

These three phenomena -greater difficulty in identifying users, less attention on their networks and change in strategy- are worrying in themselves, but they are also producing a general contraction of the advertising market.

Alphabet (Google) and Snap, which also depend on the advertising market to balance their accounts, have already presented their quarterly results and in both cases with lower numbers than expected due to the drop in investment by advertisers.

With no prospect of improvement in the short term, Zuckerberg can only hope that investors' patience does not run out.

Conforms to The Trust Project criteria

Know more

• Goal

• Instagram

• Facebook

• iPhone

• tik tok

• Google

• Android

• WhatsApp