The big reason behind losses was likely the iOS 14 tracking update. Right after it a ton of Facebook Advertisers groups on Facebook started complaining all of their carefully crafted campaigns were not producing revenue anymore. Targeting and regathering stopped making sales for advertisers and they quickly stopped spending on FB. The people who still spend are now doing videos as ads. Small advertisers were the canary in the coal mine.
No. The real reason behind the losses is that TikTok became the number 1 app in the world today, and is directly taking away social engagement time from Instagram and Facebook. Heck, Zuckerberg admitted it himself in a post today:
"[...] there are two things that I want to call out that are having an impact on our business. The first is competition. People have a lot of choices for how they want to spend their time and apps like TikTok are growing very quickly."
Android has more market share.[0] Is there something intrinsic to FB ads that are significantly more successful for iOS users rather than Android users? Does FB cater their apps to iOS somehow more successfully, e.g Android users are more savvy and less likely to take to digital nudges?
If that's not the case, then the 25% of market loss doesn't make sense to me -- are FB ads bulk purchases somehow, or are they by user?
Android has more market share but iOS has the users that are most profitable. They're dominant in affluent countries (USA, UK, plenty of countries in Europe, etc) and even in countries where it isn't dominant, it's not rare for iPhones to be the phone of choice amongst the wealthy population.
Wealthier people, I imagine, are not only more likely to want to buy things, they'll also be more willing to spend their money on new things.
To get a sense on how much more valuable "valuable" consumers can be for Facebook: last quarter on average they made $60.57 dollars per user in the USA/Canada, vs just $4.89 for their users in Asia-Pacific, for example [1]. The USA and Canada are still Facebook's biggest money-making region, in spite of also being the one where they have the fewest active users [1].
I'm not sure if an immediate 25% share price dip makes sense either, given worldwide Facebook lost only 1 million DAUs, and the number of users in the USA/Canada has steadily oscillated between 195/196 million since 2020 (the loss was in "Rest of the World" the catch-all region they make the least money in.
A lot of the value of these companies is not necessarily realized value, but value derived from the expectation of continued growth at a certain pace.I can see why investors are nervous; Facebook has never lost DAUs, there's intense competition with TikTok for the young demographic, VR/AR has been a huge bet that still hasn't paid off and the controversy around Facebook weakens the value of the brand. On top of this, in spite of revenue being good, it was not what was expected and effectively advertising on the valuable iOS demographic got much harder. Maybe that warrants a 25% dip, maybe it doesn't— in any case there's definitely reasons to be nervous.
