Following the news on Meta’s Q4 2021 earnings results;

Rachel Jones, Associate Analyst in the Thematic Team at GlobalData, a leading data and analytics company, offers her view:

“Meta is sacrificing its core business model for its fascination with the metaverse. Betting big on the metaverse isn’t a bad thing—the technology is set to be huge and provide a multitude of opportunities—but it will take at least another decade to really get going. Tech companies will need to tackle this new horizon from a position of strength.

“Meta’s Q4 earning results show the cost of its obsession to investors, who will be increasingly concerned. Its hope that the re-focus would save the company’s reputation has not paid off, its metaverse development research division Reality Labs has seen disappointing results so far, growth has plunged—even Meta’s typically strong advertising business has taken a hit as the company failed to navigate Apple’s privacy changes.

“However, it is too simple to blame Apple’s privacy changes on its advertising woes. Meta’s underwhelming number of daily users on both Facebook and Instagram signify intensifying competition for user engagement with other platforms such as TikTok.

“According to GlobalData’s scorecards, which rank companies on how they are expected to perform across a range of themes, Meta came 11 out of 50 companies in the Advertising screen but as low as 21 out of 50 in the Social Media screen. If Meta wants to keep its users, and be in a better position to tackle the metaverse, the company needs to fix its core business model—develop its short-form video content and re-build advertising before ploughing more money into a currently non-existent metaverse.”

Join GlobalData’s ‘Exploring the Metaverse,’ webinar on January 24th, 2022, 04:00 PM (GMT) as the company’s analysts discuss the most talked about theme in 2022. Register here