Text | Wang Xinxi
Xiao Za may not have thought that after Facebook changed its name to Meta, the story of the meta-universe did not impress the capital market, but instead put itself in the dilemma of difficult pie and capital selling.
A few days ago, Meta released a financial report showing that the FRL department of Meta Meta Universe Strategy lost more than $10 billion in the past year, Meta closed down 26%, and the market value shrank by more than $230 billion, which was converted into about 1.5 trillion yuan, setting the largest market value decline in the history of the US stock market.
Obviously, behind the Meta slump, on the surface, Meta's meta-universe story is not bought by the capital market, but from the perspective of internal factors, the capital market may see that Meta's social stock basic disk and advertising revenue basic disk business suffered a two-line crisis, which may mean that Meta's good days in the advertising market will come to an end.
Behind the Meta plunge
According to Meta's four-quarter data, its revenue was $33.67 billion, exceeding analysts' expectations of $33.4 billion, but the slowdown curve is very obvious.
In addition, daily active users and monthly active users did not meet expectations, with their monthly active users being 2.91 billion, lower than analysts' expectations of 2.95 billion, and their daily active users declined for the first time in 17 years.
Meta Platforms had 1.93 billion daily active users in the fourth quarter of 2021, down from the 1.95 billion expected by Wall Street analysts.
According to Meta's quarterly report, Facebook lost about 500,000 daily active users in the fourth quarter of 2021 compared to the previous quarter.
Zacker Burke's explanation for the plunge in stock prices is that due to the weak revenue outlook in the first quarter, it is important to focus on Facebook's short video products that are growing. He said that with the rise of short video platform TikTok, the company faces "unprecedented competition."<
Of course, the short video threat is part of the reason, and Apple's privacy policy is another aspect of the impact on meta-advertising revenue.
In April last year, Apple adjusted its privacy policy and implemented the ATT (Application Tracking Transparency) function, which requires the consent of users to obtain and process Apple user data. Apps that hit the App Store must comply with this privacy policy, including Facebook, of course.
In December, Apple further tweaked its privacy policy, with the Financial Times saying it allowed social platforms, including Snap and Facebook, to share user information from the iPhone, but that data needed to be anonymized and aggregated, not linked to specific user profiles.
The impact of this is that advertisers will not be able to track the performance and mode of social advertising delivery in a complete and real-time manner, which has led to the blow of targeted advertising business models such as Snap and Meta's Instagram and Facebook.
In short, Apple's privacy policy has reduced the effectiveness of targeted advertising on Facebook and Instagram, and has also affected Meta's future advertising revenue expectations.
According to Meta's forecast, its first-quarter revenue was between about $27 billion and $29 billion, well below Wall Street's expectation of $30.1 billion.
Since Apple introduced a new privacy policy last year, Meta has lost about $10 billion in revenue. But more importantly, future expectations.
Looking at future trends, based on the impact of Apple's privacy policy, advertisers may reduce the delivery of social ads and may be more inclined to seek other digital advertising models. To make matters worse, macroeconomic conditions such as inflation and supply chain disruptions have also affected advertisers' budgets.
On the other hand, the prevailing view of Facebook's stagnant user growth is that on the one hand, its user base is aging, home market growth has declined, and no new country can expand. On the one hand is Tik Tok's competitive pressure.
Of course, these are all external objective factors that are visible to the naked eye, and a survey by research firm Forrester found that in 2021, the number of people who use TikTok per week will exceed Instagram among 12- to 17-year-olds in the United States.
But the internal reason is that Facebook's product innovation is lacking, unable to grasp the emerging social trends, and its appeal to young people is declining.
And this decline in attractiveness has not happened in the last year or two, but has already had its signs many years ago.
Reports show that since 2011, news of teenagers fleeing Facebook has appeared in the news. In 2013, there were also data showing that Facebook's active users in both the UK and the US were declining in the millions per month. In 2020, foreign media sources said that Facebook's users in the United States and Canada are losing...
In the past, Facebook mainly prevented the loss of social market users through a series of acquisitions and imitation strategies.
For example, the acquisition of Instagram and whatApps, and later with the rise of Snapchat, Facebook began to imitate Snapchat, this strategy has some effect, but also delayed Facebook's risk exposure.
Until the advent of Tik Tok, a company that Facebook couldn't buy or rely on imitation to beat. This plunged Facebook into unprecedented anxiety.
From the current point of view, Meta's social market is still very stable, and its total number of users has reached 2.82 billion. After all, skinny camels are bigger than horses, and in addition, it's also investing more in short-sightedness, such as Reels.
But the trend of user churn has raised concerns about Facebook after Facebook researchers shared a statistic in an internal filing — Facebook's teenage users in the U.S. have fallen 13 percent since 2019 and are expected to fall by 45 percent over the next two years.
Therefore, in order to cover up the dilemma of user growth, metacosmity that has spent huge investments (tens of billions of dollars in the past year) and expects to continue to lose money is the future that Meta hopes to let investors see.
Meta's future rival is Apple?
However, the reality is still bone- and frill's huge losses have led to a sharp decline in stock prices, and some investors are leaving the market.
Zackerbok's metaverse world needs VR devices to support it — including a modified version of Google's Android phone operating system running on Oculus and future virtual reality devices.
That is to say, in the face of the impact of short videos, the essence of Zacker Burke's meta-universe is to create a VR version of the social network to re-attract young people.
But in vr, Meta could face a threat from Apple.
Analysts have reported that Apple's first mixed reality headset may be available this year as soon as possible, and it is unlikely to be a low-priced device in the mass market.
Thanks to the success of the acquisition of Oculus and Oculus Quest, Meta's position in the virtual reality field has always been recognized.
But Apple's headsets may significantly hit Oculus' market share, and the current decline in stock prices suggests that Apple may already be in the lead in some technologies. This means that Meta itself, a metaverse with an uncertain future, will face a deeper crisis.
Because from a practical point of view, Meta to build a metaversic platform, essentially still inseparable from the VR device - Oculus as the core of the hardware layout, before Facebook opened to North America "Horizon Worlds" is the prototype of its metaverse, and users need to use Oculus Quest 2 helmet to create characters.
Zuckerberg has previously said, "We hope that within the next decade, the metaverse will reach 1 billion people, carry hundreds of billions of dollars in digital commerce, and provide jobs for millions of creators and developers." ”
Metacosm to cover 1 billion users, in simple terms, is to achieve 1 billion level VR hardware sales. In addition, to create a meta-universe, which is in addition to a large number of underlying technology layouts, its premise is that a large number of content creators, developers, consumers, various types of B-end companies, merchants selling goods, intermediaries, etc. are added, and it is the most difficult to create the underlying operating system ecology.
But Meta's existing Oculus devices run on a custom version of Android called VROS.
In short, Meta does not have an autonomous underlying operating system.
And Apple will obviously run its own custom operating system on the upcoming VR/AR headset, the industry speculates that it may be called rOS, Apple can get a more powerful and stable performance experience and revenue through the binding of the underlying system + hardware + app store.
Therefore, from the perspective of software and hardware strength and technology, Apple is more competitive in the meta-universe field. That is to say, if Apple enters the game, although Facebook has a first-mover advantage in the meta-universe field, it does not have the ability to lead and revenue expectations.
There is no doubt that in the eyes of investors, to achieve Meta's goals, it is simply unrealistic in the short term, the loss of 10 billion is only a drizzle, the metacosm is a bottomless pit with disproportionate input and output, and it is also a gamble that cannot see the end.
Judging from the industry's imagination of the metaverse, Meta does not yet have the ability to build and construct a complete metacosm, which is not something that can be solved by spending money in the short term.
What are capital markets worried about?
Therefore, from the perspective of future growth curves and expectations, the capital market has chosen to vote with its feet.
From the perspective of the entire conceptual system of the metaverse, including network and computing technology, artificial intelligence, cloud computing, 3D vision, AR augmented reality, blockchain, digital twin, Internet of Things, edge computing nodes, DPU, etc.; sensors, chips, VR headsets, brain-computer interfaces, smart glasses, etc. on the user side.
The economic and rule elements it introduces are much more complex than those of the mobile Internet, including the introduction of virtual currency, the establishment of an economic system, the labor and rule system that supports the metacosm, how to establish a set of effective governance policies, and so on.
Therefore, until the various technologies that support the construction of the metaverse have matured, the metacosm is still only a marketing concept. But even if the metaverse era arrives, it is difficult to say whether this era belongs to Meta.
Because what the capital markets are panicking is not only that Meta's meta-universe profit expectations are far away and its future rivals - Apple is more powerful, but its real crisis has been very serious.
Apple's crackdown on online advertising will continue to bring downward expectations to Meta's advertising revenue on the one hand. On the other hand, TikTok is competing for young users, whether it is user retention or advertising revenue, Facebook is facing a two-way blow.
On the plate of digital advertising, Facebook, Google and Tik Tok are all competitors who grab food on the same plate.
It is reasonable to say that the rise of Tik Tok, Facebook and Google are affected, but Google's advertising business is still strong, before the Meta plunge, Google's parent company Alphabet released more than expected results, driving the stock price up more than 7%.
The divergence of the stock prices of Meta and Google reflects the difference in market sentiment's judgment and expectations of the growth prospects of the advertising business of the two.
Behind this is that Google's search ads have the Android system this stable plate to undertake, the degree of dependence on the privacy policy of iOS devices is low. To this end, advertisers are also investing more of their budgets in Google than Meta, which has become a triage and beneficiary of Apple's privacy policy.
As a relationship chain-based SNS company, Facebook's main source of profit is still based on user relationship chain and information flow advertising, so it will be highly dependent on the growth of users, the operation of good relationships with users depends on user growth is fundamental, and the outflow of users will shake the foundation of Facebook.
If a global social network stops growing and begins to show a trend of user churn when new users have not yet peaked and the global market still has room to grow, it may mean that its social network is losing its insight into the needs of young people, and its social fundamentals are facing an uncertain future.
At the same time, Meta's core competitiveness for the advertising market comes from gathering a large number of retained users and occupying a large number of user hours, thereby selling targeted advertising to advertisers.
Facebook's rapid growth in the past few years has stemmed from the fact that more and more advertisers prefer to spend more user time through social platforms to match specific ads and services.
This means that Facebook has always had excellent precision targeting and user conversion capabilities, which is one of the core capabilities that advertisers value.
If because of Apple's privacy policy, Meta suffers a blow in its ability to accurately target and convert users, it will undoubtedly hit the revenue capacity and attractiveness of advertisers in its core hinterland, which may also mean that the core hinterland of its social advertising will also face the impact of uncertainty and the future.
Not surprisingly, Meta's biggest plunge in U.S. stock history may not be the end, but the beginning. In a way, the biggest plunge in U.S. stock history may mean that the biggest crisis moment in Facebook's history is coming.