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Should Facebook worry about some users ‘starting to get tired of it’?

Published Jul 25th, 2022 3:23PM EDT
Meta CEO Mark Zuckerberg
Image: Drew Angerer/Getty Images

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While Mark Zuckerberg, the CEO of Facebook parent company Meta, has been proselytizing for months to anyone who will listen about the inevitability of our participation in the so-called metaverse, some analysts think the legacy component of his internet empire is in more trouble than ever.

Facebook is beset by challenges on multiple fronts at the moment. The TikTok app continues its inexorable stealing-away of young people. Apple’s anti-tracking app provisions have taken a huge bite out of Facebook’s business. The digital ad market in general is in a huge slump. Moreover, these are some of the reasons analysts suspect that on Wednesday, July 27, Facebook’s parent company might do something that it’s never done before:

Report a year-over-year quarterly revenue decline.

Facebook earnings in focus

The latest Facebook earnings report comes as Wall Street has punished many of the Big Tech names year-to-date. Amazon, Microsoft, Alphabet, and Apple are all down. Meta, though, is down more than any of them. A little more than 50% for the year, in fact, at the time of writing.

The social media giant’s corporate parent — which also owns Instagram and WhatsApp — had until last year grown its revenue each quarter like clockwork by at least 20 percent. Now? “This company is facing this perfect storm,” said Mark Mahaney, the senior managing director of internet research at Evercore ISI, per Alex Kantrowitz’s Big Technology Substack newsletter. “It has been for a while.”

There’s certainly a chance that Facebook’s parent company could surprise analysts to the upside on Wednesday. But even if it does, the expectation is that any growth would be small. Mahaney added that TikTok’s ad revenue growth, for example, is up triple digits. And “that growth has got to be coming from somewhere.”

READ MORE: Facebook just announced a huge change that’ll make the old people so confused

First-ever year-over-year revenue decline?

This Wednesday’s earnings report will illuminate the degree to which that growth might be at the expense of Facebook’s once-formidable ad revenue machine.

To counter the headwinds, the company in recent days started rolling out a revamped Facebook app design and is said to be experimenting with offering users the option for multiple profiles. Meanwhile, the TikTok-like Reels content format is becoming increasingly determinative of Facebook’s fortunes. In fact, Instagram and Facebook are both starting to nudge users toward posting more Reels. But will the attempt to turn Facebook into a TikTok-style experience be enough to staunch the bleeding?

“They’re starting to get tired of it,” said Debra Aho Williamson, an analyst at research firm Insider Intelligence, told CNBC. “Users are definitely gravitating towards other platforms or they’re engaging with Facebook less, and when you start to see that happening in bigger and bigger quantities, that’s when the advertisers really start to take notice.”

Andy Meek Trending News Editor

Andy Meek is a reporter based in Memphis who has covered media, entertainment, and culture for over 20 years. His work has appeared in outlets including The Guardian, Forbes, and The Financial Times, and he’s written for BGR since 2015. Andy's coverage includes technology and entertainment, and he has a particular interest in all things streaming.

Over the years, he’s interviewed legendary figures in entertainment and tech that range from Stan Lee to John McAfee, Peter Thiel, and Reed Hastings.