Over $230 billion in market cap went up in smoke after the company reported the number of daily active users on Facebook fell for the first time in its history, dropping by 1 million to 1.929 billion in the fourth quarter. Another historic first: a one-day fall in market value of that magnitude.

Amid signs Facebook might be the next tech sector darling after Peloton and Netflix to “go ex-growth,” the top priority for CEO Mark Zuckerberg now is to develop his new video content product, Reels, into a bona fide alternative to the wildly popular TikTok. The much touted metaverse can wait.

The company’s outlook also looked dim with annual revenue growth of only 3% to 11% for the first three months of this year, prompting the stock to shed just over a quarter of its value on Thursday, dragging other major social media stocks like Snap and Twitter down with it.

“The surprise was 1Q revenue guidance at $27-29 billion, below the Street at $30.29 billion with multiple 1Q headwinds that will likely continue in 2Q,“ Bank of America wrote in a research note. 

Almost right off the bat, Zuckerberg admitted during Wednesday’s investor call after market close that Meta struggled to find a weakness in TikTok it could exploit. Millennials and Gen Zers continue to prefer ByteDance’s user-generated content platform, famous for its viral challenges to his own Instagram and Facebook. 

“People have a lot of choices for how they want to spend their time,” Zuckerberg said, apparently trying to sugarcoat the news. “And apps like TikTok are growing very quickly.”

There could be deeper factors at play as well. Zuckerberg has become increasingly tarred by his growth-at-all-costs mentality that focuses on maximizing profits through engagement rather than actively moderating communities on the platform. 

Hashtags like #DeleteFacebook trended amid a growing uproar that its algorithms helped feed fear, radicalizing everyone from QAnon and Stop the Steal conspiracy theorists to anti-vax supporters. 

Headwinds, thanks to Apple

Thus far Reels, the company’s big hope, has proved harder to monetize as advertisers are less willing to pay for publicity on a small but growing product. 

Operations chief Sheryl Sandberg sought to reassure the market by reminding investors Meta has made successful transitions in its business model twice before: first, when it mastered the shift from web to mobile, and then, shifting from News Feed to Stories, a format that allows people to share collections of photos that disappear after 24 hours. 

“We have a playbook here,” she told investors. “The experience we have from monetizing Stories is directly applicable, so we’re not starting from scratch.”

Management nonetheless warned that 2022 would be a year of transition as it invests in new products. The first quarter will be additionally hurt by strong comparison figures from the previous year, when advertising budgets were flush with cash and Apple’s new data privacy measures had not yet been put in place. 

Called IDFA, it enables users to switch off tracking while not using iPhone apps, eating into the margins of companies like Meta that rely on it to sell ads. The company estimated a whopping $10 billion of headwinds from the measure this year.

“Apple created two challenges for advertisers,” Sandberg admitted. “One is that the accuracy of our ads targeting decreased, which increased the cost of driving outcomes. The other is that measuring those outcomes became more difficult.”

While Bank of America Research sounded optimistic the company will sort out these problems in the second half of this year, Loup Ventures managing partner Gene Munster warned the difficulty of making such a major shift from Stories to Reels should not be underestimated.

“For the next six months, it’s going to be challenging for [Meta] to really recapture investor enthusiasm,” he told CNBC in an interview. “First and foremost, they need to make their numbers.”