iNDICA NEWS BUREAU
Meta Platforms Inc co-founder and CEO Mark Zuckerberg have slipped to No 12 in the Forbes real-time billionaire index, behind India’s Mukesh Ambani and Gautam Adani, at least temporarily, with the scrip getting hammered on the markets.
The pivot from Facebook to Meta Platforms does not seem to have helped, with the share tanking 25 percent on the sharper-than-anticipated decline in profits and a gloomy outlook in its first earnings report after renaming.
The social media giant lost nearly $230 billion in market capitalization as a result, Zuckerberg losing close to a quarter (23.34 percent) of his net worth to $87.7 billion.
Meta said revenue growth is likely to slow down with users spending less time on its more lucrative services. It also blamed inflation for reduced advertiser spending. The company also estimated that ad-tracking changes introduced by Apple last year would cost it some $10 billion this year.
Meta has lost about a million daily users globally and stagnated in the US and Canada, two of its more profitable markets.
Zuckerberg is now betting on virtual reality (VR) headsets, augmented reality (AR) glasses and virtual worlds, known as the metaverse, in which users might live and work. But as he admitted in the investor call: “Although our direction is clear, it seems our path ahead is not quite perfectly defined.”
Meta expected first-quarter revenue between $27 billion and $29 billion for year-on-year growth between 3 and 11 percent, the slowest period of quarterly growth in the company’s history.
Zuckerberg is investing heavily in Meta’s TikTok rival Reels, hoping to attract young-adult users. But Reels doesn’t make the kind of money Meta churns out on its older features such as the news feed and Instagram Stories, where videos and images disappear after 24 hours.
“I’m confident that leaning harder into these trends is the right short-term trade-off,” Zuckerberg said, stressing that Reels is his fastest-growing product. The shift to Reels is claimed to be as big as Zuckerberg’s strategic transitions to mobile from web, or the bet on Stories.
But investors do not seem to be buying, and the bears won the day with relentless focus on the antitrust investigations Meta faces around the world and competition from TikTok for users’ time.
Meta reported a $10.3 billion profit for the fourth quarter, below analyst expectations of $10.9 billion and a small decline compared with last year, its first in net income growth since the second quarter of 2019.
Meta said it was working at a disadvantage because of Apple’s changes that require its apps to ask users for permission to track their activity and share it with other apps or websites. The move, driven personally by Apple CEO Tim Cook, is at the centre of an intensifying fight. Meta uses such tracking technology to sell digital ads.
“It’s not really apples to apples for us. And as a result, we believe Google’s search ads business could have benefited relative to ours,” Meta chief financial officer David Wehner said. He also complained about Apple’s business relationship with Google.
Meta Wednesday inaugurated its Reality Labs segment – insight into the health of the virtual- and augmented-reality consumer business unit that is at the heart of the metaverse efforts. The unit posted a $3.3 billion loss, an amount that has grown consistently in recent quarters.
Undeterred, Zuckerberg vowed “to invest many billions of dollars for years to come before the metaverse reaches scale”. But investors are clearly troubled by the pairing of slower revenue growth with higher spending on such initiatives.
Adding to the company’s woes are the ‘Facebook Files’, with multiple media outlets claiming Zuckerberg’s team knew their platforms were riddled with flaws that cause harm, including to children.