Following the company’s dismal fourth-quarter results on Wednesday, CEO Mark Zuckerberg is said to have instructed employees to focus on the company’s final product: video.
According to a participant who was not allowed to speak about the conversation, Zuckerberg addressed colleagues in a companywide virtual meeting on Thursday, when he stated the company is fighting against a “unprecedented degree of competition” from TikTok.
In an earnings call on Wednesday, Zuckerberg stated that Meta will be focusing on Instagram Reels, the company’s TikTok clone. “People have a lot of options for how they want to spend their time,” he explained, “and apps like TikTok are developing at a rapid pace.”
According to Bloomberg, a meeting attendee said Zuckerberg seemed red-eyed and informed staff that he might cry during the meeting, not because of the topic being discussed, but because he’d “scratched his eye.”
For the first time in the company’s history, Facebook’s user base shrank in the fourth quarter, dropping around 1 million daily active users from the previous quarter. During the business’s results call on Wednesday, the company also revealed that its investments in the metaverse lost $10 billion in 2021.
On Thursday, Meta’s market capitalization plummeted by approximately $240 billion, the largest one-day value loss in US stock market history. Zuckerberg’s net wealth has dropped by $30 billion. A request for comment from Meta was not immediately returned.
This is the first time the company has experienced a drop in its 18-year history, when it was literally defined by its capacity to bring in more new customers. The dip indicated that the core app had reached its maximum potential. The rate of increase in Meta’s quarterly user base was likewise the slowest in at least three years.
Mr. Zuckerberg is so convinced that the metaverse is the internet’s next generation — a still hazy and theoretical concept in which people move between virtual and augmented reality worlds — that he is willing to spend a lot of money on it.
It’s so enormous that last year’s spending totaled more than $10 billion. Mr. Zuckerberg plans to increase his spending in the future.
Despite this, there is no evidence that the wager will pay off. Unlike Facebook’s move to mobile devices in 2012, virtual reality is still a niche passion that has yet to break into the mainstream. Augmented reality headsets are also months, if not years, away from becoming widely available.
Mr. Zuckerberg is essentially asking employees, users, and investors to trust him and his metaverse vision. That’s a large ask for something that will cost the corporation billions of dollars over the next few years and may never happen.