Facebook share price scrambles to escape death spiral as users flee, sales drop

facebook meta logo
facebook meta logo

A year ago, before Facebook had turned Meta, the social media company was sporting a market cap of $1 trillion, putting it in the rarefied territory with a handful of U.S. technology giants.

Today the view looks much different. Meta has lost about two-thirds of its value since peaking in September 2021. The stock is trading at its lowest since January 2019 and is about to close out its third quarter of double-digit percentage losses. Only four stores in the S&P 500 are having a worse year.

Facebook’s business was built on network effects — users brought friends and family members, who told their colleagues, and invited their buddies. Suddenly everyone was convening in one place. Advertisers followed, and the company’s profits — and they were plentiful — provided the capital to recruit the best and brightest engineers to keep the cycle going.

But in 2022, the cycle has reversed. Users are jumping ship, and advertisers are reducing spending, leaving Meta poised to report its second straight drop in quarterly revenue.

See Also:   FedEx and Floship Form Commercial Partnership to Deliver What’s Next in E-Commerce

Businesses are removing Facebook’s once-ubiquitous social login button from their websites. Recruiting is an emerging challenge, especially as founder and CEO Mark Zuckerberg spends much of his time proselytizing the metaverse, which may be the company’s future but accounts for virtually none of its near-term revenue and is costing billions of dollars a year to build.

Zuckerberg said he hopes that within the next decade, the metaverse “will reach a billion people” and “host hundreds of billions of dollars of digital commerce.” In June, he told CNBC’s Jim Cramer that the “North Star” is to reach those sorts of figures by the end of the decade and create a “massive economy” around digital goods.

The Benefits Of Personalized Labels For Your Business
About Elijah Lucas 182 Articles
Elijah has done a Master in Computer Science. Elijah is a passionate blogger, technology lover, plays chess, is innovative, likes to express their views via the blog, and is a music lover. Elijah has been blogging since 2011 and has contributed several excellent articles to the internet.