Mark Zuckerberg Calls Out 2 Factors That Are Impacting Meta's Business

Meta Platforms Inc.'s FB  CEO Mark Zuckerberg has listed two factors that are having an impact on the company's business.

What Happened: Competition for user time from apps like TikTok and Meta’s transition of its services towards short-form video like Reels will put some pressure on Meta’s growth in the near term, Zuckerberg said Wednesday on the company’s quarterly earnings call.

Meta’s focus on serving young adults over optimizing overall engagement will also impact growth, the CEO added.

Zuckerberg noted that while video’s monetization has been slow historically, Reels is expected to monetize more like News Feed or Stories over time.

“Reels is now our fastest growing content format by far. It’s already the biggest contributor to engagement growth on Instagram and it’s growing very quickly on Facebook too,” Zuckerberg said.

See Also: How To Buy Facebook (FB) Shares

Why It Matters: Meta Platforms — formerly known as Facebook — reported earnings for the fourth quarter that missed analysts’ estimates.

Meta said it expects competition for user time, price growth and the impact of Apple Inc. AAPL changes to iOS policies to be headwinds in the first quarter.

Reels adoption is crucial to Facebook's longer-term user engagement growth as it competes with Snap Inc. SNAP and TikTok, Morgan Stanley analyst Brian Nowak said in December.

The analyst estimates that Reels, along with Instagram Shopping and FB Marketplace, could potentially add about $3 billion to Facebook's 2022 ad revenue.

Price Action: Meta Platforms shares closed 1.3% higher in Wednesday’s regular session at $323.00, but fell 22.9% in the after-hours session to $249.05.

Read Next: Why Facebook-Parent Meta's Stock Crashed 23% After-Hours Today

Photo: Courtesy of Anthony Quintano via Flickr

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