Snap Up, Zuck Down

Snap Up, Zuck Down
Illustration: Soumyabrata Roy/NurPhoto, Getty Images

The world is changing, and oh, how the tables have turned. On Thursday, Snap showed up behemoth-sized rival Meta, formerly known as Facebook, by reporting a profit for the first time as a public company. Meta, on the other hand, experienced the worst crash in stock market history, losing $US251 ($348) billion in value in one day.

Snap’s good fortunes were an unexpected bright spot on Thursday, which was dominated by Meta’s deep dive. Although its profit was modest — or $US23 ($32) million in the last quarter of 2021, compared to $US4.1 ($6) billion in revenue for the year — the results marked an important turning point. The company also boasted positive user growth, reporting 319 million daily active users in the last quarter of 2021, an increase of 54 million year-over-year.

In prepared remarks on Snap’s call with analysts on Thursday, chief financial officer Derek Anderson said its direct response advertising business had recovered from changes to Apple’s privacy feature, called App Tracking Transparency, or ATT, “quicker than we anticipated.”

“We grew our community, expanded our product offerings and demonstrated the power of our augmented reality platform,” Snap CEO Evan Spiegal said in prepared remarks. “We faced some fresh challenges in 2021, but posted strong results.”

Snap shares rose by 52% in after-hours trading.

The same can’t be said for Meta, which saw its shares drop by 26%. The company reported a decline in user growth for the first time in its history, going from 1.93 billion daily active users in the third quarter of 2021 to 1.929 million in the fourth quarter, losing about a million users. As if that weren’t enough, it missed its earnings estimates for the fourth quarter and issued a lower than expected revenue forecast for the first quarter of 2022. Meta is also expecting a $US10 ($14) billion hit in revenue this year as a result of Apple’s ATT feature.

Meta’s woes had a direct impact on the personal fortune of CEO Mark Zuckerberg, who lost $US31 ($43) billion in one day, according to Bloomberg. The loss kicked Zuckerberg out of the world’s top 10 wealthiest people list, the outlet stated, for the first time since 2015. Considering the Meta CEO still has a net worth of about $US92 ($128) billion, forgive me for not feeling bad for him.

In a virtual company-wide meeting on Thursday, Zuckerberg said that the stock drop was due to the company’s weak revenue forecast, Bloomberg reported. Zuckerberg told employees that it was important on focus on growing Instagram Reels, its short-form video product.

The Meta CEO’s eyes were red and teary in the meeting. It wasn’t because of the stock crash, he maintained, it was because he had a scratched cornea. Who knows though, maybe it was a little bit of both.