Meta, which suffered a historic decline in the last quarter of last year, is making new preparations. Analysts are hopeful of a new era for the company.
Meta, which made a major brand change earlier this year, faced a historic decline. In February last year, Facebook announced for the first time that it had experienced a decline in the number of daily active users. The disappointing decline caused the company to lose about $230 billion in stock market value.
Analysts hope to see progress behind Meta’s decline. However, analysts said they would follow Meta’s first-quarter report on Wednesday, adding that a full turnaround was not expected.
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The company’s priority will be to stop the user decline
Debra Williamson, chief analyst at market research firm Insider Intelligence, said investors will be watching Meta’s first-quarter report, but there will be slow progress in the latest quarter. Meta’s struggle was not unexpected. Meta CEO Mark Zuckerberg has warned that Apple’s new privacy rules could result in a $10 billion loss of sales to the company this year.
All edits prevent Meta from collecting some user data. This led the company to make changes to some advertising business models. The changes make reels, which are especially short video content, very important.
In its latest quarterly report, the company warned that year-over-year growth could continue to have an impact on the first quarter of 2022. CFO (Chief Financial Officer) David Wehner said in a statement:
We expect both increased competition for people’s time and continued shift of engagement in our apps to video surfaces like Reels, which make money at lower rates than Feed and Stories.
Meta’s transition to video content suggests it is trying to retain young users. Analyst Debra Williamson said TikTok is a formidable competitor and not a sustainable business model for it. He also said, “Last quarter, they said they’d understand how to make better money from the Reels. In this quarter, we are looking for signs that it is actually happening,” he added.
The number of users is very important for meta’s success. The historic loss, especially on users on Facebook, was one of the most important results of the fourth quarter 2021 report. Meta’s priority, Williamson said, is to stop the decline in this use.