Author 丨 Zhang Rui
Edit | Kang Xiao
Produced | Shenzhen Network Tencent News Xiaoman Studio
Facebook user growth stagnated, net profit growth rate fell year-on-year, and Facebook Reality Labs, which invested heavily, lost more than 10 billion yuan a year. Dollar, Facebook after changing its name to Meta ushered in its worst report card in 10 quarters.
After the U.S. stock market closed on February 2, US time, Facebook, which changed its name to "Meta", released its financial report for the fourth quarter and full year of fiscal 2021. Since U.S. stocks can also be traded within two hours after closing, due to the impact of "Meta" earnings data, Meta's after-hours stock price closed at $249.05 per share, down 22.89% compared to Meta's closing price of $323 per share on the day.
The meta closed at $237.76 per share on February 3, down 26.39% from the previous day's closing price of $323 per share, with a total market capitalization of $661.4 billion. That means Meta fell $237.1 billion, or about 1,508 billion yuan, in one day.
Affected by the decline in Meta's after-hours stock price, other social company stocks were also dragged down. Snap plunged 16.91 percent after hours, Pinterest tumbled 9.27 percent, and Twitter tumbled 7.97 percent.
After-hours market value evaporated by 1.3 trillion yuan, but also led to other social media stocks after-hours stock prices fell sharply, meta 2021 fourth quarter and full year of financial results how bad is it?
Stagnant user growth wants to reach a billion people with a metacosm
Since its inception in 2004, Facebook's daily and monthly active users have stagnated for the first time.
According to Meta's financial report data, in the fourth quarter of 2021, Facebook's daily active users (DAU) were 1.93 billion, an increase of 5% year-on-year; monthly active users (MAUs) were 2.91 billion, an increase of 4% year-on-year.
Compared with the daily and monthly active user data in the third quarter of 2021, it is found that Facebook's user growth is basically stagnant. The third and fourth quarters of daily active activity were flat. Judging from the year-on-year growth rate of these two indicators, from the second quarter of 2020, its year-on-year growth rate is also in a state of decline.
In the second quarter of 2020, Facebook's daily active and monthly active growth rate was 12% year-on-year, and in the fourth quarter of 2021, the year-on-year growth rate of daily active activity fell to 5%, and the year-on-year growth rate of monthly active activity fell to 4%.
In addition to DAU and MAU, Meta also publishes two indicators: DAP (Household Daily Active Population) and MAP (Monthly Household Active Population). In addition to Facebook, DAP and MAP also include social products owned by the Meta "family" such as Instagram, Messenger, and WhatsApp.
According to the financial report, in December 2021, the average Meta DAP was 2.82 billion, an increase of 8% year-on-year; MAP was 3.59 billion, an increase of 9% year-on-year.
For Facebook's user growth to stop, some industry insiders analyzed, "partly because Facebook's attractiveness to young users has declined."
When it comes to competing for younger users, TikTok has always been a competitor that Facebook can't ignore. According to data, in September 2021, TikTok reached 1 billion monthly active users worldwide. In July 2021, TikTok became the first non-Facebook app to reach 3 billion downloads worldwide.
To attract younger users, Zuckerberg revealed on the fourth quarter of 2021 Meta Analyst Conference Call: "Reels (short videos), community messaging, commerce, advertising, privacy, AI and important meta-universe strategic products are our seven main investment priorities in 2022. Given TikTok's popularity with consumers, the company will focus on the development of the Instgram Reels brand."
Reels is a new feature in the Instagram app that allows users to shoot or upload videos of 3 to 15 seconds, and users can edit, dub, and add effects to the video before posting it.
In addition to launching the Reels brand, Zuckerberg is also betting on user growth on the "metacosm.".
"Over the next decade, metaverses will have 1 billion users, hundreds of billions of dollars in digital commerce, and jobs for millions of creators and developers," Zuckerberg said when Facebook renamed it "Meta."
Burned more than $10 billion in a year in the "metacosm"
However, before achieving 1 billion users and hundreds of billions of dollars in digital commerce, the first thing that the "metacosm" brings to "Meta" is to burn money.
After Facebook's name change, "Meta's" financial reporting methods changed, starting with the fourth quarter of 2021 earnings, the company added reality Labs (RL) division. The revenue composition of "Meta" is mainly divided into two parts: one is the "Family of Apps", which includes Facebook, Instagram, Messenger, WhatsApp and other services, which mainly comes from advertising; the second is the RL division, which includes hardware, software and content related to AR (augmented reality) and VR (virtual reality).
According to the "Meta" earnings report, in the fourth quarter of 2021, "Meta" advertising revenue was $32.64 billion, up 20.1% year-on-year and 15.4% month-on-month; Reality Labs revenue was $877 million, up 22.3% year-on-year and 57.2% month-on-month.
In the fourth quarter of 2021, the company's Reality Labs business growth was mainly reflected in hardware such as Quest 2 and software such as Horizon. On the hardware side, quest 2 is selling well during Christmas 2021, and quest store transactions are now more than $1 billion.
According to IDC data, in the second quarter of 2021, Facebook's Oculus Quest 2 (later renamed Meta Quest) shipped about 1.6 million units, up 351% year-on-year. According to statistics, in November 2021, the sales of quest2 has reached 10 million units.
On the software side, Horizon is the core product of Meta's vision of building a metaverse. Recently Horizon has been opened to users in the United States and Canada. In 2022, Meta plans to launch a mobile version of horizon metaverse social products, which will bring the virtual scene experience of the early metaverse to more existing mobile devices in addition to VR.
While meta-universe revenue grew rapidly sequentially, reality Labs' contribution to Meta's revenue was small. In the fourth quarter of 2021, Reality Labs had revenue of $877 million, representing only 2.6% of revenue.
But in terms of operating income, Reality Labs has become a "money-burning" black hole, losing $10.193 billion in 2021 alone.
From the perspective of operating income, from 2019 to 2021, the operating loss of reality Labs business was $4.503 billion, $6.623 billion and $10.193 billion, respectively. It lost more than $20 billion in three years, and the contract was more than 120 billion yuan.
For the loss caused by the "cloud universe" business, Zuckerberg has previously predicted, "At least in the next three years, Meta's meta-universe business will require long-term capital investment, and the possibility of profitability is very small, which will compress Meta's profit margins and put pressure on Meta's cash flow." ”
The advertising business was hit by Apple's net profit growth rate fell year-on-year
According to the fourth quarter of 2021 financial report, the company's revenue in the quarter was $33.67 billion, an increase of 20% year-on-year, slightly higher than the analysts' expectation of $33.4 billion; net profit was 10.285 billion yuan, a year-on-year growth rate of -8.33%, which is also the first time since Q3 2019 that the year-on-year growth rate of net profit has been negative.
Advertising has always been the bulk of Meta's revenue, with Meta's advertising revenue of $32.639 billion in Q4 2021, accounting for 96.9% of revenue.
For the slowdown in the growth rate of revenue in the fourth quarter, especially the revenue of the core advertising business, the Meta financial report gave two explanations, one is from the perspective of the general environment, the global supply chain disruption, labor shortage and inflationary pressure, resulting in the sluggish advertising market in the fourth quarter; the other is the impact of Apple's iOS policy changes on the advertising business.
On April 27, 2021, with the official release of Apple IOS 14.5, the most powerful new privacy rules in Apple's history began to land. After Apple pushed the new IDFA regulations, if the APP or company wants to stay on the iOS system, it must study its own attribution scheme and cooperate with Apple SKadnetwork for technical docking.
As for the impact of Apple's iOS policy, Sheryl Sandberg, Meta's chief operating officer, explained on the results call, "Apple has created two challenges for advertisers, one is that the accuracy of our advertising targeting has decreased, which has increased advertiser costs; and the other is that it has become more difficult to measure the effectiveness of advertising."
Shirley Sandberg predicts that Apple's IOS policy changes will have a $10 billion impact on the company's revenue in 2022.
To that end, JPMorgan analyst Doug Anmuth downgraded Meta's rating to neutral from its previous over-allocation. "Meta advertising revenue growth has slowed sharply, while the transition to meta-universe business is costly, uncertain, and likely to last for years..... We have adjusted our posture to a wait-and-see state – believing that the company's stock price will be under more pressure or range in the coming months."
The core advertising business is constrained by the general environment and Apple's policy changes, and the "meta-universe" business that Zuckerberg bets on is still in a state of burning money, and from the current point of view, Facebook, which has changed its name to Meta, will not change the reality of aging.
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