May Facebook and Social Media Die A Quick Death

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Meta Faces Historic Stock Rout as Growth Stalled​


Shares of Facebook parent Meta Platforms Inc. plunged 27% in an epic rout that, in its sheer scale, is unlike anything Wall Street or Silicon Valley has ever seen.

The catalyst was startling news that for the first time ever, Facebook’s user growth seems to have hit a ceiling and its momentum is stalling. Thursday’s collapse wiped out more than $230 billion of market value in an instant -- a figure unprecedented in stock-market history -- and has investors asking a question that once seemed unthinkable: Are the best days over for Facebook, one of the world’s most widely held technology stocks?

This quarter’s sales forecast also disappointed Wall Street and Chief Executive Officer Mark Zuckerberg saw his personal wealth potentially plummet about $24 billion. He acknowledged that Meta is facing serious competition for user time and attention, particularly from viral video-sharing app TikTok.

The report marks a dramatic turnaround for a company that has posted share gains in every year but one since its 2012 initial public offering, stoking concern that Meta Platforms’ flagship product and core advertising moneymaker has plateaued after years of consistent gains.

“These cuts run deep,” wrote Michael Nathanson, an analyst at brokerage Moffett Nathanson, who titled his note “Facebook: The Beginning of the End?” The results were “a headline grabber and not in a good way.”

Zuckerberg said Meta’s rival to TikTok, Reels, is growing quickly, but monetization has been slow. He asked investors for patience as the product ramps up.

“Over time we think that there is potential for a tremendous amount of overall engagement growth” with Reels, he said on a conference call Wednesday. “We think it’s definitely the right thing to lean into this and push as hard to grow Reels as quickly as possible and not hold on the brakes at all, even though it may create some near-term slower growth than we would have wanted.”

The misses come at a critical juncture for the company, which is fighting regulatory battles on multiple fronts and also trying to justify a costly shift in corporate strategy to bet on the metaverse, Zuckerberg’s vision for an immersive internet that may take years to realize. For the better part of a decade, it has seemed like Facebook would never stop growing. Now young users -- the future consumers of its advertising -- are choosing platforms like TikTok and Google’s YouTube for entertainment and community instead.

Rarely, if ever, has Meta been confronted by so many substantial threats at the same time. Aside from user growth woes and intensifying competition, Meta is also contending with a crackdown on targeted advertising by Apple Inc., which it said may trim $10 billion in revenue this year, and cutbacks by advertisers that are paring budgets because of rising costs and supply chain disruptions.

The company, which changed its name to Meta last year to indicate its future direction, also said it will be taking on the META stock ticker in the first half of the year. Shares plunged as low as $237.07 in New York……..

 

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