Technology | Meta’s stock has plunged for more than a year, and it may foretell the demise of the social media empire

Mark Zuckerberg conquered almost the entire internet in 15 years, but now attacks are raining down from all directions.

Zuckerberg began his world conquest in 2004 when he founded Facebook with his student friends at Harvard University.

Since then, Facebook and its subsidiaries Instagram and Whatsapp have amassed more than 3.5 billion users and dominated the digital advertising market. On that side, Mark Zuckerberg has become one of the richest people in the world.

Now that world conquest has come to an end, or so investors fear.

The growth in the number of users of Facebook and Instagram has stalled. The parent company Meta’s turnover is stagnant, and the share price has fallen by almost 70 percent from last year’s highs.

Meta’s stock market plunge is striking, because Facebook and Instagram are still making money. Meta’s market value on the stock exchange is only about ten times higher than the predicted net profit for next year, which indicates the distrust of investors.

“Investors have lost trust in Zuckerberg and with it the entire company,” the analyst Tero Kuittinen evaluate.

Meta is largely Mark Zuckerberg’s company. He is the company’s largest shareholder. Having managed daily operations for more than a decade Sheryl Sandberg left the company in the summer. Now Meta is even more under Zuckerberg’s thumb.

Especially Mark Zuckerberg’s latest object of enthusiasm has many doubting.

In the future, Zuckerberg wants to focus on building a so-called metaverse, i.e. a three-dimensional virtual world. According to media reports, Zuckerberg’s company has already invested tens of billions of euros in the metaverse. The importance of the project is also indicated by the fact that a year ago the company changed its name from the former Facebook to the current Meta. The entire company’s strategy and future is therefore tied to Zuckerberg’s obsession with a three-dimensional virtual world.

The project has progressed steadily. Media information according to Meta’s virtual reality is still very unfinished and the user experience is weak. According to analyst estimates, the sales volumes of Meta’s virtual glasses are calculated in millions rather than tens or hundreds of millions. So there is a long way to go to reach the number of users on Facebook and Instagram.

The images and information about the metaverse that have been shared with the public have not exactly garnered praise. According to critics, the graphic look of the metaverse is poor. Among other things, The New York Times has reported that Meta’s employees are suspicious of the entire project.

Kuittinen considers Zuckerberg’s enthusiasm for the metaverse to be special in many ways. First, Meta develops the virtual world into a meeting place for companies and their employees. It means a significant change to previous social media platforms, as the company’s Facebook and Instagram are mainly leisure and entertainment media.

Few companies are still enthusiastic about the idea of ​​moving their employees completely into the virtual world. On the contrary, numerous companies have said in recent months that they want their employees who are used to working remotely during the pandemic back to the office.

Kuittinen wonders even more about Meta’s marketing strategy.

“I don’t understand why Zuckerberg has attached his own face as the front image of the metaverse. Almost all the pictures in the metaverse are of Zuckerberg’s face. Apparently there is no one inside the company who would dare to tell Mark that this looks special.”

To the same at a time when the metaverse is sucking billions from Meta’s coffers, the future of Meta’s canines, i.e. Facebook and Instagram, seems more uncertain than before. Competing social media services such as Tiktok and Snap have been growing rapidly for years. The competition only seems to be getting tougher, as the new social media apps Bereal and Gas rose to the top of the app store download lists in the US in the fall.

The change from before is significant. A few years ago, Facebook and Instagram sovereignly dominated the social media market.

Kuittinen worked as a Nokia analyst at the beginning of the millennium. He sees the same signs in Meta’s situation as in Nokia before the collapse of the mobile phone business.

“I think these Meta and metaverse are just like Nokia and N-Gage [Nokian flopannut pelipuhelin] in 2003. Backslashes when a large successful company tries to enter a completely new area. The top management is in the yard like a snowman.”

Of difficulties despite this, Meta cannot be declared a lost cause yet.

Facebook and Instagram are still raking in huge profits. Analysts predict that Meta will make a net profit of closer to 30 billion euros this year. That’s a huge amount of money. According to analyst forecasts collected by the Refinitiv data service, only eight American companies make a higher net result than Meta.

Even if a large part of the metaversumi investments go wrong, Metalla can still afford to make other growth investments.

“Meta’s price drop is a pretty classic example of the fact that few companies remain winners and innovators forever. But the company still has a lot of potential,” United Bankers analyst specializing in technology companies Ernst Grönblom says.

“Despite the price drop and the momentary uncertainty, Meta is still one of the most interesting companies on the planet, there’s no getting away from it.”

In addition to the Metaverse strategy, Meta’s price drop is due to problems in the old business. It’s not just a matter of mistrust in Zuckerberg, but in Meta’s services and the ethics of operations in general.

According to Gronblom, users do not trust Zuckerberg’s social media services and investors also doubt the company’s responsibility.

“Meta is now getting pressure from all directions,” Grönblom assesses.

Facebook and Instagram have been raging for years in the middle of scandals. For example, revealed in 2018 The Cambridge Analytica scandal undermined many users’ trust in Facebook.

Since then, Facebook and Instagram have been criticized, among other things dangerous to the mental health of their users. Facebook has even been sued for complicity to the genocide in Myanmar. According to the lawsuit, Facebook did not deal with the hate speech published on the platform decisively enough.