Why Meta, formerly known as Facebook, suffered its biggest one-day wipeout ever

It’s stock plummeted 26 percent and its market value plunged by more than $230 billion on Thursday, following a dismal earnings report on Wednesday. Mark Zuckerberg, the chief executive, outlined how the company was navigating a tricky transition from social networking toward the so-called virtual world of the Metaverse.

Here are the key reasons Meta is struggling -

Apple’s App Tracking Transparency hurts Meta

Apple’s changes to its operating software give users the choice to prevent apps from tracking their online activity for ads, making it harder for advertisers who rely on data to develop new products and know their market.

According to Dave Wehner, Meta’s chief financial officer, the impact of Apple’s privacy changes could be significant - around $10billion for 2022.

Ad budgets shifting to Google

David Wehner, Meta’s chief financial officer, highlighted that as Apple’s changes have given marketers less visibility into user behaviors, many have shifted their ad budgets to other platforms, especially Google.

Google has far more third-party data for measurement and optimization than Meta’s ad platform, which is making advertisers to move to Google and other platforms.

Facebook user growth has stagnated

Though the company saw modest gains in new users across its apps (including Instagram, Messenger, and WhatsApp), its core Facebook social networking app lost about half a million users over the fourth quarter.

The analysts estimate that the dip of the Facebook may suggest that it has reached its peak.

The Reels and TikTok challenge

The growth and popularity of TikTok and its short video feature pose an enormous challenge for Instagram as both the companies compete for the same space.?

On Wednesday, Mr. Zuckerberg announced Instagram Reels is the number one driver of engagement across the app, which is placed as a short video on Instagram, but it does not yield advertising revenue since people skip the videos.

Facing stiff competition from Apple, TikTok, Google, the threat of anti-trust action, the future of virtual-reality dream poses various challenges for Meta. They will have to work really hard and innovate out of their challenges this time to gain trust of investors and users.