Facebook's Daily Active Users (DAUs) Have Dropped For The First Time in The Company's 18-Year Existence

Feb 8, 2022
3 min read

The daily active users(DAU) had a sharp decline for the first time in Facebook’s 18 years of existence. The daily active users(DAU) fell sharply to 1.929 billion in just three months to the end of December, down from 1.93 billion in the previous quarter. This stat is according to Meta Networks, the parent company of Facebook. Facing competition from Tiktok and Youtube, coupled with a decline in advertising spending, the company had already warned of slow revenue growth. Meta's shares dropped more than 20% in after-hours trading in New York. Meta's stock market value was diminished by about $200 billion (£147.5 billion) as a result of the reduction in its share price. Other social media companies' stock prices plummeted amid extended trading, including Twitter, Snap, and Pinterest.

The company's sales growth has been impeded, according to CEO Mark Zuckerberg, as audiences, particularly younger users, have migrated to competitors. Apple's operating system privacy restrictions have also hurt Meta, which operates the world's second-largest digital advertising platform behind Google. The changes, according to Meta's chief financial officer Dave Wehner, have made it more difficult for marketers to target and assess their Facebook and Instagram advertising, potentially costing them "in the neighbourhood of $10 billion" this year. Meta's overall revenue, which is primarily derived from advertising, climbed to $33.67 billion during that time, slightly above market estimates. It also predicts sales of $27 billion to $29 billion for the next quarter, which is lower than analysts' expectations.

To compete with rivals such as Tiktok, which focuses on videos, the company has been investing in video. Mr. Zuckerberg voiced optimism that investments in video and virtual reality, like past bets on mobile advertising and Instagram stories, will pay off. He did point out, however, that previous strategy changes did not have to contend with a formidable opponent.

He also added that the team was doing a great job and the product is being developed at a fast pace. What is rather interesting here is that TikTok is already a major rival and continues to expand at a rapid pace.

Is Meta on the Decline?

Facebook had earlier changed its name to Meta, saying that the name Meta suited more on what the company plans to do. Meta claims that expanding its influence beyond social media into areas such as virtual reality will allow it to better "encompass" what it does. The change impacts only the parent company, not individual platforms like Facebook, Instagram, or Whatsapp. Facebook has taken this action in response to a series of negative stories about the corporation based on documents obtained by an ex-employee. The corporation has been accused of putting "earnings ahead of safety," according to Frances Haugen. Google reorganized its operations and renamed its parent company Alphabet in 2015, although the name has yet to be finalized.

Facebook has always been a growing platform. The worldwide figures have been in one way for every quarter of its existence. However, growth has slowed in Europe and the United States in recent years. This was obscured by an increase in users from the rest of the globe. Facebook is simply not as popular among younger people as it once was. TikTok, by its own admission, is harming commerce. However, there are additional reasons why investors are concerned about Meta. Meta changed its name to emphasize its focus on the Metaverse. But Meta is still a long way from creating a Metaverse; it is a pipe dream for the time being.

Effect on Meta Shares

In after-hours trading on Wednesday, shares of Facebook's parent company Meta fell more than 20% to $246.53, from $323.00, after the company revealed lower-than-expected results and statistics indicated the social networking site had lost daily users for the first time in its 18-year existence.

The California-based company's net earnings fell more than 8% year on year to $10.2 billion in the fourth quarter but were up around 11% on a quarterly basis. Revenue for the three months ending December 31 increased by 20% to more than $33.6 billion, slightly beating expert projections of $33.4 billion. Meta's net profit for the fiscal year 2021 increased by around 35% to more than $39.4 billion, while revenues increased by 37% to $117.9 billion.

Facebook’s daily active users fell short of analyst expectations. The number reached 1.929 billion in the 3 months to the end of December. As compared to 1.84 billion in the exact period the previous year.  They were down from 1.93 billion the prior quarter.

In the last three months of 2021, Facebook's monthly active users were flat at 2.91 billion, compared to the previous quarter, but slightly higher than the 2.8 billion monthly active users in the same period of 2020.

Meta's rebranding comes at a time when lawmakers and regulators are increasingly scrutinizing the company for charges of anticompetitive behavior and the consequences of how it handles toxic or deceptive information on its Facebook and Instagram platforms.