Eli5 why Meta is doing so poorly since people are still using it and advertising on it.


Eli5 why Meta is doing so poorly since people are still using it and advertising on it.

In: 4

8 Answers

Anonymous 0 Comments

From my rudimentary understanding of Meta. , particularly Facebook, is that they’re losing users for several reasons.

__TikTok__ – TikTok is killing then on the short form videos space and they can’t compete.

__Younger people don’t use it__ – Young people tend to prefer TikTok and SnapChat.

__Saturation__ – They don’t have many countries to expand to anymore and so they can’t sign up more people as everybody that was going to use Facebook already does.

Instagram is also not competing with other services as much as it did.

Anonymous 0 Comments

**All tech firms have been struggling**

When interest rates go up, it makes assets that are likely to grow more in the far future than they’ll grow in the short term less attractive. This applies to basically all tech firms, including Meta.

**Meta’s user base has stopped growing**

Since late 2020, Meta has reported essentially no growth in users and even a small decline in users and revenue more recently. When a firm has, for over a decade, grown relentlessly, this plateau and mild decline is a big shift. You can be one of the two major players in a duopoly (online advertising) and still be struggling to grow.

**Meta has acquired a terrible reputation**

People really don’t like Mark Zuckerberg, the concept of a metaverse, or Facebook, the company’s flagship product. The firm has not really been able to turn around what has been a cavalcade of bad press for, like, the last 5-6 years.

Anonymous 0 Comments

A business like Meta can have many users and still lose money.

On the plus side they have advertising revenue.

On the minus side they have all their costs such as salaries and all the computing resources necessary to provide Facebook, Whatsapp etc. etc.

It can easily be that the costs are bigger than the revenues, even when the revenues are large.

A business doesn’t even need to be losing money to be doing badly. The investors in the business expect a certain return on their investment…

Anonymous 0 Comments

There’s two different metrics for “doing poorly”

As a business Facebook/Meta is doing fine – $28.8B in revenue last quarter, $8.3B profit.

As an *investment* though, shareholders are concerned that the company is no longer growing, and thus no longer deserves a high premium on the share price.

Plenty of companies exist in this stage of profitable but marginal growth indefinitely, but tech companies have been treated as huge growth investments for years so it’s difficult to transition from the “tech startup” role into a “slow and steady utility company” role.

Anonymous 0 Comments

Could it be for reasons such as me getting a 30 day ban today on Facebook for calling someone a muppet because Facebook claimed that was bullying?

While at the same time they will allow openly racist and trans/homophobic comments(which is what I was responding to calling the guy a muppet) to stay up as that isn’t against “community guidelines”

I think you’ll find that may have something to do with it

Anonymous 0 Comments

Zuckerberg invested several billion into getting Biden elected. He’s lost 71$ billion as a result of the market plunge under Bidens watch. Gotta love karma.

Anonymous 0 Comments

1. They are no longer actively growing their user base. Stock price depends largely on the possibility of future growth (so that people can get a return on their investment), so they either need to be growing their user base or expanding their profit base (e.g. monetising more of their real estate)
2. They have plunged Billions into a Metaverse which nobody is actually interested in, they have failed to show a value proposition for the metaverse, they have failed to generate a userbase, and they’ve shown no hint of monetising it in any valuable way. The market sees this as a massive folly and is punishing them for that.
3. Other brands are eating their lunch in a massive way, and Meta have not shown a clear vision for rectifying that, so the market has lost faith.

Anonymous 0 Comments

Facebook has a lot of mobile users. Many of them are on Apple, and these users tend to trend richer, which makes ads directed at them more valuable. Until Apple changed its rules on tracking, making it much harder for Facebook to deliver customized ads.

According to Facebook, that lowered revenue by $10 billion a YEAR. It’s that ongoing loss that crushed Facebook, which had been really good at growing revenue (and still has earnings and margins that most companies would kill for)