Facebook is finished, but The Meta story has just begun?

Mr. Zuckerberg's social media dynasty is starting to get a bit over, with Facebook's daily active users falling sequentially for the first time in 17 years in the fourth quarter.

Meta warned that its first-quarter revenue would be more than $2 billion below Wall Street's forecast, particularly due to increased competition from video platforms such as ByteDance's TikTok.

Meta's stock plunged 21% in after-hours trading. Meta has to scramble to expand what today's users want most – video.

Facebook's total number of users fell for the first time

This is the first time for a social media platform that has experienced endless growth since its debut 17 years ago.

According to the quarterly report of parent company Meta, Facebook lost about 500,000 global daily users in the fourth quarter of 2021 compared to the previous quarter.

Although this does not seem to be a significant decline relative to its total daily active users of 1.93 billion. But for a company driven by the number of users, it represents the end of a long-term rapid growth in users.

Facebook's user growth has stagnated, in part because of its aging user base and the fact that there are no new countries to expand. Facebook's user growth in the U.S. has begun to decline.

In addition, another part of the decline in user growth is due to increased competition from other applications. Despite Meta's efforts to pursue the attention of younger users, there are still many people who are attracted to apps like TikTok.

This means that meta changes strategy to retain and attract new eyeballs more than ever. To that end, Meta says it's making more investments in short video features, such as Reels. In the long run, the company is spending huge investments (tens of billions of dollars in the past year) to build its AR/VR capabilities and other future technologies that will support the virtual world.

When we include Facebook's entire "family of apps" — like Instagram and WhatsApp — its users overall are still growing, albeit relatively slowly. It increased from 2.81 billion to 2.82 billion sequentially.

Image source: Meta financial report, Longbridge Dolphin Research

Tiktok has emerged as the world's king of visits in 2021

Data from Cloudflar, which tracks internet traffic, shows that Tiktok began to suddenly show strength in mid-February last year, replacing Google for the first time. Including Thanksgiving (November 25) and Black Friday (November 26), these Western "big days", Tiktok is also the most visited in the world.

Tiktok reached 1 billion monthly active users in September.

Tiktok's rise is mainly due to the fact that people spend more time at home under the lockdown measures, and the demand for entertainment has risen. "People prefer short videos to search engines," CBS said.

In addition to promoting Asian markets with low cultural barriers, Tiktok also has different content for different markets. For example, Southeast Asia mainly promotes dance and funny, Japan and South Korea mainly promote the second dimension, and Europe and the United States mainly promote fashion. Since its development, the video content on Tiktok is very diverse, covering music, comedy, beauty, cooking, politics and many other fields.

At the same time, Tiktok is easy to use, and ordinary people can also create their own original videos. Tiktok's videos generally don't take more than 15 seconds and are less than 1 minute long. Industry insiders pointed out that Tiktok provides users with easy-to-use tools such as special effects, filters and stickers, which can make the original material into a video that is easy to spread and professional.

This is more in line with the appetite of young people than current social media apps.

Meta's goal is to "reach a billion people in ten years"

But Laura Foreman of the Wall Street Journal believes that "if everyone thinks meta is just a company that has lost its edge on social media, then it will bring opportunities for long-term investors." ”

Mr. Zuckerberg said in October that Meta's goal is to "empower the virtual world to reach 1 billion people over a decade." "Logically, this is likely to be achievable. Stifel's Mark Kelley estimates that by the end of this year, there will be 2.5 billion gamers worldwide in addition to China. Then Meta only needs to reach 40% of it in the next eight years to achieve its goals. If you take into account the 5% compound annual growth rate for gamers, this goal is more likely to be achieved.

Because even though Meta may not be as cool as they used to be, they still cover nearly half of the world's population. As of the first quarter of last year, more than 1 billion people visited the Marketplace launched in 2016 every month; nearly 10% of Facebook's users visited Shops within a year of launch.

For Meta, Zuckerberg described the way forward as "not perfectly defined." He believes that "if you are in the virtual world every day, then you will need digital clothing and digital tools and different experiences". Meta will also invest tens of billions of dollars in the coming years to build the next phase of the metacosm.

Of course, the story of the metaverse is unlikely to help the number of users in the short term. As a result, Meta is also scrambling to expand what users obviously want on social media – video. Over the past month, Instagram chief Adam Moseri has focused on its short video product, Reels, and increasingly targeting young people. Mark Zuckerberg also made Reels a top priority for the company this year to enable Meta to stay on top of the market in terms of user growth. Although Zuckerberg said that Reels' thin profits will affect the growth of advertising revenue in the short term.

There's no doubt that Facebook, now called Meta, is facing a real challenge to its social media dominance.