NEW YORK (NYTIMES) - Meta, the company formerly known as Facebook, suffered the stock market's biggest one-day wipe-out ever on Thursday (Feb 3) as its stock plummeted 26 per cent and its market value plunged by more than US$230 billion (S$309 billion).

Its crash followed a dismal earnings report on Wednesday, when chief executive Mark Zuckerberg laid out how the company was navigating a tricky transition from social networking towards the so-called virtual world of the metaverse.

On Thursday, a company spokesman reiterated statements from its earnings announcement and declined to comment further.

Here are six reasons that Meta is in a difficult spot.

1. User growth has hit a ceiling

The salad days of Facebook's wild user growth are over.

Even though the company on Wednesday recorded modest gains in new users across its so-called family of apps - which includes Instagram, Messenger and WhatsApp - its core Facebook social networking app lost about half a million users over the fourth quarter from the previous quarter.

That's the first such decline for the company in its 18-year history, during which time it had practically been defined by its ability to bring in more new users.

Meta's executives have pointed to other growth opportunities, like turning on the money faucet at WhatsApp, the messaging service that has yet to generate substantial revenue. But those efforts are nascent.

Investors are likely to next scrutinise whether Meta's other apps, such as Instagram, might begin to hit their top on user growth.

2. Apple's changes are limiting Meta

Last spring, Apple introduced an "App Tracking Transparency" update to its mobile operating system, essentially giving iPhone owners the choice as to whether they would let apps such as Facebook monitor their online activities. Those privacy moves have now hurt Meta's business and are likely to continue doing so.

Now that Facebook and other apps must explicitly ask people for permission to track their behaviour, many users have opted out. That means less user data for Facebook, which makes targeting ads - one of the company's main ways of making money - more difficult.

Doubly painful is that iPhone users are a far more lucrative market to Facebook's advertisers than, say, Android app users. People who use iPhones to access the Internet typically spend more money on products and apps served up to them from mobile ads.

Meta said on Wednesday that Apple's changes would cost it US$10 billion in revenue over the next year.

The company has railed against Apple's shifts and said they are bad for small businesses that rely on advertising on the social network to reach customers. But Apple is unlikely to reverse its privacy changes, and Meta's shareholders know it.

3. Google is stealing online advertising share

Meta's troubles have been its competitors' good fortune.

On Wednesday, Meta's chief financial officer David Wehner noted that as Apple's changes have given advertisers less visibility into user behaviour, many have started shifting their ad budgets to other platforms - namely Google.

In Google's earnings call this week, the company reported record sales, particularly in its e-commerce search advertising. That was the same category that tripped up Meta in the last three months of 2021.

Unlike Meta, Google is not heavily dependent on Apple for user data. Mr Wehner said it was likely that Google had "far more third-party data for measurement and optimisation purposes" than Meta's ad platform.

Mr Wehner also pointed to Google's deal with Apple to be the default search engine for Apple's Safari browser. That means Google's search ads tend to appear in more places, taking in more data that can be useful for advertisers. That's a huge problem for Meta in the long term, especially if more advertisers switch to Google search ads.

4. TikTok vs Reels

For more than a year, Mr Zuckerberg has pointed to how formidable TikTok has been as a foe. The Chinese-backed app has grown to more than one billion users on the back of its highly shareable and strangely addictive short video posts. And it is fiercely competing with Meta's Instagram for eyeballs and attention.

Meta has cloned TikTok with a video product feature called Instagram Reels. Mr Zuckerberg said on Wednesday that Reels, which is prominently placed in people's Instagram feeds, was currently the No. 1 driver of engagement across the app.

The problem is that while Reels may be attracting users, it does not make money as effectively as Instagram's other features, like Stories and the main feed.

That's because it is slower to make money off video ads, since people tend to skip past them. That means the more that Instagram pushes people towards using Reels, the less money it may make on those users.

5. Spending on the metaverse is crazy

Mr Zuckerberg believes so much that the Internet's next generation is the metaverse - a still fuzzy and theoretical concept that involves people moving across different virtual and augmented-reality worlds - that he is willing to spend big on it.

So big that the spending amounted to more than US$10 billion last year. Mr Zuckerberg expects to spend even more in the future.

Yet there is no evidence the bet will pay off.

6. Antitrust spectre looms

The threat of United States regulators coming for Facebook just won't go away.

Meta faces multiple investigations, including from a newly aggressive Federal Trade Commission and multiple state attorneys-general, into whether it acted in an anti-competitive manner. US lawmakers have also coalesced around congressional efforts to pass antitrust Bills.

Mr Zuckerberg has argued that Meta is not a social networking monopoly. He has pointed furiously to what he calls "unprecedented levels of competition", including from TikTok, Apple, Google and future opponents.

But the threat of antitrust action has made it more difficult for Meta to buy its way into new social networking trends.