Around 1 year ago, Facebook rebranded itself as Meta, and at that time, the social media giant was worth $1 trillion (USD). A market cap of such volume had earned Facebook a spot among a select few technology giants in the world.
But today, things have changed for Facebook... For starters, around 66% of the company's value is gone after peaking in 2021. On top of that, the trading price of Meta is also at the lowest level since 2019!
Another worrying factor is that the company is reporting double-digit losses (percentage terms) for the third quarter in a row! Out of all the stocks on the S&P 500, only 4 are witnessing such a bad performance!
If we look at the core of how Facebook grew, it can be boiled down to the network effects. The registered users brought the people they know on Facebook and so on. All of a sudden, everyone was on the Meta-owned platforms, which in turn attracted the advertisers on the platform.
All of these things made the perfect conditions for the company to earn a lot of profit for years to come. On top of that, the company also hired the best talent to ensure that this cycle of growth continues.
It was 2022 when this growth cycle not only stopped but actually reversed! From users and advertising leaving the platform to reduced revenue - A lot of things are going bad for the company right now!
Businesses and websites are now also removing the Facebook login button, which is a sign that Facebook is now losing the status it once enjoyed!
But the biggest problem of all is Mark Zuckerberg's obsession with the Metaverse concept... The company is pouring a lot of money into the Metaverse and is even betting on the very future of the company! But for now, there is little hope of any near-term revenue from the Metaverse, which is making things more difficult.