Wen |Juny
Edited | Vicky Xiao
Recently, the social media sector in the United States has been full of turmoil.
Last week, just as everyone was still in a panic because of the epic plunge in the stock price after Meta's earnings report, the next day, Snap, which had been nearly cut off, led the stock price to soar with a record performance, soaring more than 60% after hours. In addition, Pinterest, which was brought down by Meta, also pulled 25% after hours with a performance that exceeded expectations.
The social giants' operation of jumping back and forth in an unprecedented plunge and surge has made everyone stunned. At the same time, after calming down, everyone also found a problem: this quarter, it seems that it is not the social media collective collapse, but only the Meta collapse.
In the quarter, in addition to Meta's first-time user decline and net profit decline, almost all other social platforms have delivered remarkable performance: Snap, which rejected Meta's two acquisitions, reached 319 million daily active users and achieved its first profit, and Pinterest's international user growth was remarkable and brought new opportunities, not to mention TikTok, which had previously announced a breakthrough of 1 billion monthly active users and swept the world.
In addition, more and more social startups are also challenging Meta. Its messaging apps Messenger and Whatsapp are under threat of strong growth from Telegram and Discord, and the "Facebook group" has largely been replaced by Reddit.
Under the background of peers, Meta has recently appeared particularly "lonely".
Attack Snap,
Achieve your first profit since your inception in the midst of difficulties
On Wednesday, Meta's after-hours plunge caused a huge shock to the entire social media sector in the United States, and people took the boss Meta as a weather vane and thought that all social media would fall into the water this quarter. Among them, Meta's old rival Snap was directly frightened to plunge about 24%.
But soon, Snap presented an exciting V-shaped reversal drama.
Snap's stock price on the day of the release of its fourth-quarter earnings report
A day after Meta's earnings release, Snap, the parent company of snapchat, the "burn after reading" social software, released the company's fourth quarter and full-year financial results for fiscal 2021. Snap's fourth-quarter revenue was $1.298 billion, up 42% year-over-year, and net profit was $22.6 million, the company's first quarterly profit in the decade since its inception. For the full year 2021, Snap achieved revenue of $4.117 billion, up 64% year-over-year; net loss of $488 million, a narrower 48% year-over-year; adjusted diluted earnings per share of 50 cents, nearly nine times more than in 2020.
In addition to the eye-catching revenue data, Snap also handed over a completely different user growth report from Meta.
Although also suffering from the shock from TiKTok, Snap maintained continued user growth in the fourth quarter, with 319 million daily active users, an increase of 54 million compared to the same period last year, an increase of 20% year-on-year. It's worth noting that this is already the fifth consecutive quarter that Snap has achieved more than 20% daily active user growth, and this quarter, whether in North America, Europe or the rest of the world, Snap's daily active users have achieved month-on-month and year-on-year growth.
In terms of average revenue per user, Snap has also maintained a steady pace of progress. In the quarter, the average user revenue reached $4.06, an increase of 18% year-on-year, with North America and Europe performing well, both reaching more than 30% year-on-year growth.
Snap 4 Q2021 ARPU, image from Snap
Unlike Meta, which seems to be mired in Apple's new privacy rules, Snap said its advertising business, directly affected by the iOS changes, recovered faster than expected, thanks to Snap's rapid and precise strategic alignment. On the one hand, it quickly adjusts its marketing strategy and actively helps advertisers to deal with the new iOS regulations, on the other hand, it carries out technological innovation and efforts on new content platforms and AR, develops short video platforms with its own characteristics, and actively explores new business models such as AR stores with large partners such as Disney and Coca-Cola.
Step by step, Snap regained the confidence of advertisers and the market.
Pinterest：
Turning to the global market, it is favored by retailers
Also regaining market confidence is Pinterest, a social media outlet for image streaming. Although Pinterest's user data is not very good this quarter, with 444 million monthly active users down 6% year-on-year, down 10 million from the previous quarter, the data released at its earnings report shows that this decline seems to be no longer continuing. Pinterest said that the monthly active users as of the beginning of this month were 436.8 million, compared with 431 million users at the end of the fourth quarter of 2021, and there are signs of a rebound.
While there was a slight decrease in users, the quarter didn't seem to have affected advertisers' willingness to advertise on Pinterest.
In the fourth quarter, Pinterest achieved revenue of $847 million, up 20% from $706 million in the year-ago quarter, and adjusted diluted earnings per share of $0.49, both of which exceeded market expectations. This shows that Pinterest has not been affected by unfavorable factors such as Apple's new privacy regulations and macroeconomic environment this quarter, stabilizing its partners and revenue channels.
In addition, the most surprising thing for investors is that there are signs that Pinterest has successfully developed in the international market. Pinterest U.S. regional revenue for the fourth quarter was $648 million, an increase of 11% year-over-year, while international revenue was $199 million, an increase of 61% year-over-year. The average active international user generated an 81% increase in revenue for the company compared to a year ago, up 62% year-on-year, far more than in the United States.
Pinterest's 4th quarter 2021 financial report, image from Pinterest
Previously, Pinterest's international users accounted for about 80% of the total number of users, and it was also a major source of user growth in recent years. Between the fourth quarter of 2017 and the fourth quarter of 2020, the average annual growth of monthly active users in the United States was only 29%, while the growth of the international region reached 159% during the same period. But Pinterest's effect of converting these users into revenue lags significantly behind that of the United States.
In terms of the per capita revenue creation indicator of Pinterest users, the ratio of the United States and the international region in 2019 is as high as 36:1, which means that the potential of international users has not been fully released, and the market has previously underestimated the profit opportunities contained in Pinterest's existing user base. Pinterest also said that the international business will become an important growth point to drive the company's growth in the next stage.
After the earnings report, Pinterest's stock price, which had also fallen more than 1%, rose sharply in response, and at one point rose about 30% in after-hours trading.
Why did only Meta fall?
Compared with the performance of Snap and Pinterest, which have their own highlights, Meta is undoubtedly completely collapsed this time.
In the earnings conference, Meta also summarized several key factors affecting performance and user growth, including changes in user habits (young users turn to TikTok), Apple's new privacy regulations (affecting advertising volume and pricing), new businesses such as Reels are immature (and not making money yet), and an economic environment with inflation and supply chain crises (advertisers' budget reductions).
But combined with the performance of several others, do the reasons Meta list really hold water? TikTok's siphon effect on young users is not only The Meta, Apple's new privacy regulations have also had a huge impact on Snap and Pinterest, and Youtube's short video Shorts business is as new as Reels but has not pulled down the overall revenue, not to mention the super macro factor of the economic environment.
Image from the RTE website
At present, in addition to Meta, several others have stabilized their positions by rapidly adjusting their strategies, innovating business tracks, and even achieving counter-trend growth in user or advertising revenue. So, is it fair to say that it's not that people don't like to use social media anymore, but that users have migrated from Meta's platform to other platforms, not that advertisers don't like ads anymore, but are more willing to spend money on other platforms. The big cake that originally belonged only to Meta is being carved up by other platforms.
If this is indeed the case, what is causing this phenomenon to arise, and is there more subjective factors or more objective factors?
First of all, it is undeniable that as the world's largest social media, under the rapid rise of Apple's new privacy regulations and TikTok, Meta must be the most affected and direct one, so the negative performance of users and performance, compared with Snap, Pinterest, which focus on a certain field, smaller platforms, will certainly be more obvious, which is an objective fact.
But subjectively, Meta has really not spent much time innovating in the social space over the years. Looking back at Meta's growth path, since the success of Facebook and Messenger more than a decade ago, Meta's growth in the social field has relied on acquisition, plagiarism, and imitation: 1 billion acquisition of Instagram, 19 billion acquisition of WhatsApp, imitation of Snapchat launch of Stories, imitation of Craigslist launch of Marketplace, imitation of Zoom to launch Rooms, Imitating TikTok launches Reels...
Silicon star people have also previously summarized Meta's "plagiarism to continue life, by acquisition of immortality" of the social empire expansion road, in Meta, we can once see the kind of sitting on the world's billions of users, holding a large number of banknotes of superiority, as if in the social field, everything is at your fingertips, direct copy, directly buy on the line.
Therefore, in the past few years, Meta has not spent much effort on running and innovating its own social empire, but has developed greater ambitions, such as building a digital currency system that is above the global sovereign currency, such as taking the lead in opening up and occupying the virtual world. In fact, there is no problem with these goals, but In recent years, Meta has given people the feeling that they always take some steps too much.
In the case of internal and external troubles, will the renaming of the heroic broken wrist change and the comprehensive transformation of the meta-universe shake the foundation of its social empire?
Image from Fossbytes
Since Facebook's founding in 2004, the era of social media boom dominated by it has lasted for nearly 18 years. Relying on mergers and acquisitions all the way, Meta, which holds the three aces of social media, has always been firmly in the position of a global social brother.
But in the ever-changing Internet battlefield, social platforms are also changing rapidly with technology and people's preferences. And when the game of big fish eating small fish is no longer popular, and the game of overtaking by copying imitation is no longer effective, now, under the pressure of the rise of a new generation of social forces represented by TikTok, Meta seems to have more and more heroic twilight flavor.
Undoubtedly, this earnings season is a wake-up call for Meta. In this era of social media, how long the days of relying on the mountains and eating the mountains will last is the next question that Zuckerberg must answer positively.