The parent company of the social network Facebook shocked the stock market when it presented its quarterly figures with a surprisingly cautious outlook. The company, which recently renamed itself Meta Platforms from Facebook, fell more than 20 percent at times in after-hours trading. The shares of competitors also came under considerable pressure. Snap also fell 20 percent, while Twitter was down 8 percent.

Meta predicted unusually low sales growth of 3 to 11 percent to $27 billion to $29 billion for the first quarter, while analysts had expected more than $30 billion on average. The group provided several justifications, and one of them was particularly notable. He spoke of increasing competition for the time of its users. Critics often complain about Facebook’s dominant market position, which is why the group is even facing a lawsuit from its antitrust authorities in the USA.

With the reference to increased competition, he now painted a somewhat different picture. And he also backed that up with another metric: According to him, the number of his daily users in North America fell by one million to 195 million in the past quarter.

“People have a lot of choices”

CEO Mark Zuckerberg said in a conference call: “People have a lot of choices.” And he specifically referred to the rapid growth of the smartphone app TikTok. That’s why “Reels”, the format for short videos introduced in 2020 and considered Facebook’s answer to TikTok, is all the more important. Three months ago, Zuckerberg described TikTok as “one of the most effective competitors” his company had ever had when presenting business figures.

Meta also cited other reasons for its cautious forecast: The Reels format, while growing quickly, has not yet brought in as high advertising revenues as other features. In addition, the current bottlenecks in global supply chains and general inflation have left their mark on advertisers’ budgets. In addition, the controversial changes to Apple’s data rules also made themselves felt. The new guidelines introduced last year impede the collection of user data that is relevant to the advertising business. This makes it difficult for Facebook to tailor advertising to individual users and to measure the success of advertising campaigns.

Google reported brilliant results
The figures for the final quarter of last year were not free of disappointments either. Although sales increased by 20 percent to $ 33.7 billion and was slightly above analysts’ expectations. But that also meant a significant slowdown in growth compared to previous quarters. Net income fell 8 percent to $10.3 billion due to higher costs. Earnings per share of $3.67 were 17 cents lower than expected.

Meta’s weak numbers were all the more surprising given that competitor Google had reported stellar results just a day earlier. Its parent holding Alphabet reported a rapid increase in sales and profits, its share price rose significantly on Wednesday.

In the most recent quarterly report, Meta re-identified its business areas for the first time. On the one hand there is the “family of apps”, which includes the regular service Facebook and platforms such as Instagram, Messenger and Whatsapp. So far, they have represented almost the entire group turnover.