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Meta: Will We Call It a Comeback Story?

Mark Zuckerberg and Meta have struggled this year. Meta saw its first quarterly revenue decline in July 2022 despite achieving a market value peak of $1.1 trillion in August 2021 due to increased internet activity during the COVID-19 epidemic.

Three months later, another dip raised investor concerns about Zuckerberg’s $10 billion annual investment in the untested metaverse. By November, 11,000 employees—13% of the workforce—were laid off after the company’s market value plunged 60%.

Meta announced a 4.5% year-over-year sales reduction for the last three months of 2022 on Feb. 1. The decline was smaller than expected, but the business projected revenues of $28.5 billion for the current quarter, more than the first three months of 2021 when Apple’s privacy laws for iDevices made it harder for advertisers to monitor online customers.

 

Zuckerberg said the corporation would terminate non-profitable or less important projects more aggressively and closely manage spending. Meta aims to buy back $40 billion more shares.

A California judge dismissed the Federal Trade Commission’s complaint against Meta’s acquisition of Within, a major virtual reality fitness software developer.

Investors were pleased. Meta’s stock price rose 20% after three months of 70% growth. This raised its market valuation to $484 billion, suggesting a tech giant comeback.

Zuckerberg stays optimistic. Meta is improving its AI and circumventing Apple’s privacy rules. Especially in “Reels,” where algorithms deliver short videos on Instagram and Facebook, Meta’s key revenue sources. Short-form video platform TikTok inspired this.

With its short-form videos and interesting content, TikTok has quickly gained popularity, especially among young people. Facebook must develop new ways to engage and retain users, especially younger ones.

Facebook developed Reels, a short-form video platform like TikTok, and integrated Instagram videos into the main Facebook app to compete with TikTok.

TikTok outperforms Meta’s Facebook. TikTok is a standalone platform with less privacy scandals and other issues. Facebook must match features and address privacy and data security issues to compete.

The US is scrutinising Chinese-owned TikTok. Some lawmakers are boycotting the app over national security concerns.

Other barriers exist besides TikTok. Digital advertising is growing more cyclical, and the economy remains unstable. Advertisers may cut back even if Meta’s western countries dodge a recession. Worse, spend with Meta’s competitors.

Washington, where nothing happens fast, is unlikely to outlaw TikTok.

Another FTC action demands Meta’s dissolution. Europe is drafting strict requirements for huge digital agencies.

Most crucially, Horizon Worlds, Meta’s main virtual world attraction, lost users at the end of last year, indicating that few individuals want to go to the metaverse.

Meta faces greater Metaverse market competition. Top ten games have billions of user accounts in virtual worlds.

2.5 billion players inhabit these virtual worlds. This exceeds Facebook, Instagram, and WhatsApp users.

Tencent, the world’s largest gaming corporation, owns Player’s Unknown Battlegrounds, Crossfire, and Dungeon Fighter, the top three virtual worlds with 3.5 billion players.

Meta lacks an online social payment system like Tencent’s WeChat, QQ, and Spotify. Tencent also owns 40% of Epic, which runs Fortnite’s largest online virtual concerts with 350 million players.

Microsoft, the fifth-largest gaming firm, has 600 million Minecraft gamers. Microsoft is ahead of Meta with Xbox, HoloLens, and its metaverse vision.

Roblox surpasses Meta too. 50% of U.S. 9-to-12-year-olds play Minecraft or Roblox. This threatens Meta’s metaverse acceptance. Roblox now boasts 60 million daily users.

Meta has 5 million Oculus, Horizon Home, Horizon Worlds, and Horizon Workroom users.

Meta faces major problems in the fast-growing metaverse economy. Minecraft, Roblox, Tencent’s Crossfire, PUBG, and Dungeon Fighter dominate the metaverse’s user base.

Unity and Unreal Engine, multi-billion dollar companies with numerous of projects, are building the metaverse. Meta’s Horizon Worlds uses Unity, not in-house.

TikTok and Pinterest are challenging Meta. Meta must adapt to solve privacy and security issues to be competitive. and emphasising visual appeal and user engagement.

Meta’s social media success depends on how it handles these problems.

Microsoft, Tencent, Roblox, and Unity’s supremacy threatens Meta’s metaverse ambitions. These firms dominate the virtual reality sector and have the resources and knowledge to develop.

Meta may struggle to gain market share in the current climate. To support Zuckerberg’s metaverse ambition, Facebook and Instagram must keep growing income.

 

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