Facebook stock is crashing. Here’s why

Facebook investors are in a world of hurt after the share price of its parent company, Meta, dropped 20% yesterday in after-hours trading. That share plunge has slightly worsened today, with Facebook shares down over 22% in pre-market trading at the time of this writing.

The 20+% share plunge is Facebook’s worst one-day drop since the company began trading almost a decade ago, reports The Financial Times. So what’s causing it? The crash came after Facebook announced its Q4 2021 results yesterday, in which the company revealed:

• Facebook lost daily users for the first time in its history: In Q4 2021, Facebook lost half a million daily users. As Vox points out, that’s a drop in the ocean considering Facebook’s 1.93 billion total daily active users. However, this is the first time that’s ever happened, and it could be a sign of worse to come.
• TikTok is a big threat: Facebook also specifically named TikTok as a major threat to its user base. Facebook has long seen an aging of users, with younger users jumping to cooler apps like TikTok. Now that exodus of young users to TikTok is really starting to bite the company. “What’s unique is that TikTok is so big as a competitor already, and also continues to grow at quite a fast rate off of a very large base,” Meta CEO Mark Zuckerberg conceded on the financial call.
• Blame Apple, too: Facebook also noted that Apple’s privacy changes to iOS last year are starting to cost the company tons of ad revenue. The feature is called App Tracking Transparency and allows iPhone users to forbid companies from tracking them across third-party apps. As CNBC reports, on the financial call, Meta CFO Dave Wehner revealed, “We believe the impact of iOS overall is a headwind on our business in 2022. It’s on the order of $10 billion, so it’s a pretty significant headwind for our business.”
• A lower than expected forecast: Finally, Facebook issued Q1 2022 guidance of revenue between $27 billion and $29 billion. The street was expecting guidance of $30 billion. The lowered guidance can be attributed to the impact of the above.