Judging by the drop in stock price today, investors are not convinced by Facebook’s plans to dive into the metaverse. Shares of Facebook’s parent company Meta are down more than 20% today in aftermarket trading after it released its 2021 Q4 earnings report.
Facebook cited stagnant user growth in its earnings report as it took its eye off of flagship products and pivoted to creating a metaverse—an internet where people use digital avatars to interact, often with virtual and augmented reality headsets. Several blockchain projects are competing to build an open-source metaverse, powered by cryptocurrencies and Web3 technologies.
The drop is just the latest in bad news for the tech company. Last month, the Diem Association (formerly Libra), spearheaded by Facebook to govern what was meant to be a global digital currency, sold its assets to Silvergate bank for $200 million, effectively ending the social media giant’s stablecoin ambitions.
That project, launched in June 2019, faced pressure out of the gate from regulators and U.S. Senators Sherrod Brown (D-OH) and Brian Schatz (D-HI), among other lawmakers. In its early days, the association saw the exit of several founding members, including PayPal, Visa, eBay, Stripe, and MasterCard.
It never recovered, and the project continued narrowing its vision until it shut down. Though last year it released a cryptocurrency wallet, Novi, that tool will not host a Diem coin, but the Paxos stablecoin.
The pivot to the metaverse—complete with Facebook CEO Mark Zuckerberg rebranding the company to Meta in October—is also having a bumpy start thanks to continued skepticism from both sides of the political divide. Many distrust Facebook for its alleged role in perpetuating misinformation surrounding COVID-19 and allowing foreign interference during the 2016 U.S. Presidential election. Not helping are claims of verbal and sexual harassment taking place in Meta’s virtual world.
The company is ubiquitous enough to take it in stride, for now. The report states, “On the impressions side, we expect continued headwinds from both increased competition for people’s time and a shift of engagement.”