Facebook Faces Meta-Sized Problems

Social media in trouble [Click to view in browser](. Dear Reader, We have some BIG UPDATES for all you Markets and Minds subscribers. [And you need to take action now to make sure you don't miss out!]( Our newsletter got a complete makeover. We overhauled the format and layout of the newsletter, making it easier to read and simpler to follow. And gave it a nifty new title - THE JUICE [But you won't receive this newsletter unless you sign up HERE.]( Because pretty soon, Markets and Minds will disappear FOREVER! Proprietary Data Insights Financial Pros Social Media Stock Searches Last Month Rank Name Searches #1 Facebook 567 #2 Pinterest 337 #3 Snap 163 #4 Twitter 134 #5 Spotify 121 Social Media in Trouble As we discuss in our main story, Facebook saw lower advertiser spend as supply shortages and inflation crimped marketing budgets. But this shouldn’t come as a surprise. Last quarter, Snap (SNAP) already highlighted this problem. And it makes all the sense in the world. If you sell any good or service and can’t keep up with demand, why would you stoke it further by advertising? Yes, there are reasons like brand recognition. But that’s not really applicable for small and medium enterprises. We expect this problem to permeate all social media advertising companies. Yet, it begs the question as to why Google (GOOGL) wasn’t affected. Apple’s privacy changes have a more direct impact on Facebook than they do Google searches. Facebook is losing insight into its users while Google isn’t. That’s the long and short of it. And it’s why we were optimistic for Google even after its recent run yet cautious on social media companies in the near-term. But make no mistake, they will come back as supply chain congestion is resolved. Sponsored [Man who called 2020 Crash: Huge Event in 2022]( A historic event in 2022 will cause a massive shift in the wealth divide. It could soon impact the wealth of thousands of Americans. [More here.]( Advertising Facebook Faces Meta-Sized Problems Key Takeaways - User growth slowed dramatically in Q4, giving facebook its first quarterly decline in Daily Active Users. - Management guided well below analyst forecasts citing headwinds from Apple’s privacy changes to lower advertising spend due to inflation and supply shortages. - Plus, the newly reported Reality Labs, Facebook’s AR/VR/metaverse bet lost more than $3 billion last year and will easily surpass that in 2022. Meta (FB) reported earnings and let’s just say the market wasn’t thrilled. Shares opened down more than 25% below Wednesday’s close. Here’s why. Users Growth Stalls In one of the most disappointing quarters, Facebook’s Daily Active Users (DAUs) dropped for the first time quarter over quarter ever! Total monthly users landed at 2.91 billion for Q4, flat compared to the prior period. The ratio of the two remained relatively flat at 66%, the one bright spot. Hit From All Sides Outside of internal user growth, the company faced headwinds from all over: - Competition Heats Up - Instagram, the company’s photo-sharing and short-form video app, faces stiff competition from TikTok. The company is transitioning more towards the Reels short-form video platform. While it’s gaining traction, the company is losing money on the old format while Reels still isn’t as heavily monetized. - iOS Problems - Meta continues to face the fallout from Apple’s (AAPL) privacy changes that make data used for personalized ads more limited, diminishing. - Advertisers Spend Less - With the supply of products limited across multiple industries and inflation soaring, many advertisers are pulling back on spending or switching towards lower spend advertising. - Costs Skyrocket - The whole metaverse venture is costing a chunk of cash. Last quarter, the Reality Labs unit lost $3.3 billion. And it could take 15 years before it turns a profit! The Bottom Line: Near-term, Facebook could see shares trade even lower as its main profit center sees lower ad spend. However, that will ease as global supply constraints do. Regardless of how bad this quarter appears, the company still grew revenues 37% YOY and sent EPS up 36%. News & Insights Freshly Squeezed - [Forget Rivian Automotive Inc (RIVN): 10 EV Stocks to Buy for Long-Term Gains]( - [Energy Crisis In The US? More Big Policy Blunders As Oil Heads Towards $100?]( - [One Stock Worth 35 Amazons? (Sponsored)]( - [Wall Street in Fives - Must Read Lists at Midday]( - [Get Our Top Stock Pick Analysis Every Weekday Free]( [Make sure to sign up for The Juice to keep receiving our premier investment newsletter.]( # [submit to reddit]( [submit to reddit]( [submit to reddit]( To ensure delivery of all emails, [whitelist us](. Update your email preferences or unsubscribe [here](. View our privacy policy [here](. Copyright ©2022 InvestingChannel. 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