Facebook’s User Growth Ends After Consistently Increasing for Nearly Two Decades

Facebook Hits a Wall

As Meta Platforms (FB) released its earnings report on Wednesday, an unexpected data point emerged: Facebook’s user growth has stalled for the first time in its history. Analysts note this marks the end of an 18-year-long trend during which the social media giant consistently added users. This week’s discovery and the news that Facebook in fact experienced a net loss of users in some markets sent the stock price tumbling.

Sources indicate CEO Mark Zuckerberg has privately warned this could happen. Analysts explain the “network effect” that helped Facebook’s rise in popularity for the better part of two decades could also cause exponential user-base losses as internet trends shift elsewhere. Meta Platforms disclosed this week that competition from other platforms like TikTok has contributed to stalled growth.

Natural Constraints and Changing Trends

Some analysts argue Facebook’s growth was bound to level off at some point given its extreme popularity: there are only so many people in the internet-connected world, most of whom use Facebook already. Some Facebook users disclose they only use the site for specific things like wishing someone a happy birthday. In the recent past, the company has acquired other platforms such as Instagram and WhatsApp to attract new users.

Executives are also focused on trying to retain existing users. For example, Meta Platforms’ growth team constantly looks for problems that may cause people to leave Facebook, such as bugs that keep users from logging in or accessing some parts of the platform.

How Facebook Is Responding

Analysts argue Facebook needs to increase the amount of new content featured on the platform. Meanwhile, executives are seemingly focused on pushing Instagram’s Reels, which functions similarly to TikTok. Instagram also now shows posts from accounts users aren’t following, and groups are aggressively pushed on Facebook as well.

All of this continues while Meta Platforms faces scrutiny from antitrust regulators and the possibility of new legislation, making new acquisitions difficult. The company’s name change in October of last year also demonstrates its commitment to the metaverse, which analysts claim is unlikely to become a profitable sector anytime soon—if, perhaps, ever. Still, many industry observers identify Facebook’s failure to keep growing its user base as the most pressing concern.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS220020401