The first economic consequences of the abrupt turn of the rudder that Meta, before Facebook, has given towards the metaverse have already been felt. The company continued to grow in 2021, but it did so at a slower rate than it has in previous years, and below what analysts had forecast, according to the EFE Agency. Particularly bad was the last quarter of 2021, in which Zuckerberg’s company had 8% less profit, which has caused fear among its investors, who have rushed to sell shares and have caused its stock market value to have fallen. 20%.
The numbers. Meta entered some 118,000 million dollars (104,000 million euros) in 2021, which is 37% more than in 2020. From October to December, it invoiced 33,671 million dollars, 20% more than in the same period of the previous year, according to its annual balance sheet. However, the increase in expenses in this period has meant that its profits in the last quarter have fallen by 8%.
The year 2021, therefore, has been good in terms of income, but not so much in profits. Thus, in 2020 the increase in turnover compared to 2019 was only 22%, compared to 37% in the last year, but the profits of the year in which the pandemic began grew by 58%, compared to 35% in 2021.
The bet. It was to be expected that the change in direction that Facebook took by becoming Meta and betting almost everything on the metaverse would have some kind of consequence in its balance sheets. Especially after Mark Zuckerberg announced billionaire investments to develop this digital universe that he considers the next frontier of the internet.
As we already explained in Xataka, Meta has increased its investment in research and development (R&D) in the last year to levels much higher than that of the rest of the companies in the sector. The company disburses 24,655 million dollars annually in this concept alone, which represents around 21% of its turnover, and plans to continue increasing the figure. There are others, like Amazon, that invest more money, but none dedicate such a high percentage of their income to this outlay. Those of Jeff Bezos hardly dedicate 11% of what they invoice to R&D, Microsoft 13% and Alphabet, the parent company of Google, 15%.
Disbandment of investors. Although the drop in profits is justified by the huge outlay dedicated to the development of the metaverse, Meta investors have seen with great uneasiness the decline in its profitability (earnings per share has fallen by 5%), and have rushed to sell shares as soon as the results of the company were known, which has caused its stock market value to sink by 20%.
This flight of investors can be considered, to a certain extent, normal when we talk about the stock market and a company that offers worse results than expected. But it has more readings besides the economic one. The confidence of investors in Meta has fallen as a result of the Facebook Files scandal, and the most conservative do not see clearly the direction that the company is taking, nor do they trust the captain and founder of the ship, as we already have in Xataka. Reasons that may have led a significant number of them to decide to abandon ship definitively after knowing the latest financial data.
The twilight of an empire. A final cause for concern for investors has been the announcement that Facebook, the company’s flagship forever, lost 2,021 users for the first time in its history. In the last quarter of last year, one million users left the social network. And although it still has some 1,929 million, astronomical figures, the decline makes investors wonder if we are facing the beginning of the end of the reign of the white efe.
These data show that the worst fears of those responsible for Facebook are being fulfilled. And it is that, as revealed by the Facebook Files, the directors of the social network had racked their brains in recent years to try to attract younger generations and stop the aging of the platform, without success. According to their internal data, US centennials use their app 13% less and expect it to drop 45% in the next two years.
Remarkable results. Despite the fact that their profits have fallen in the last quarter, and that they have lost the confidence of a good number of investors and users, Meta’s data remains, for the moment, solid. The company has entered in 2021 37% more than in 2020, with profits of 39,370 million dollars, 35% more than in 2020.
Facebook and Instagram, the company’s great economic engines, continue to be lucrative veins of income, and sustain Zuckerberg’s adventure without too much trouble for the moment. However, the uneasiness shown by investors and the loss of users are worrying signs that something is changing in Meta. Time will tell if the metaverse is the solution.
