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Facebook's (FB) power is a direct result of the network effect. Each user's utility of Facebook increases as the number of users increases. (Said simply, the more the merrier.) The network effect is bidirectional; therefore, each user's utility of Facebook decreases as the number of users decreases. Facebook lost users last quarter. Watch Meta's share price this morning to gauge the market's reaction to this news for yourself.

You might also pay attention to Facebook's guidance on advertiser spending, which is a far more troublesome metric. Regardless of Meta's issues with teenage mental health, privacy, antitrust litigation, etc., a dollar spent advertising on Facebook yields one of the highest returns on advertiser spend (ROAS). When business gets bad, the first thing most businesses do is cut their advertising budgets. It's not a smart thing to do, but you see it all the time. Facebook's guidance on its ad revenue may be prescient. 

The Verge has an interesting article about this today which is worth a read.
 

Facebook lost daily users for the first time ever last quarter

A metaverse pivot isn’t going to fix the social network’s main problems: slowing user and ad growth
By Alex Health

Since its inception, Facebook’s user growth has essentially been up and to the right. But on Wednesday, it reported its first-ever quarterly decline of daily users globally, along with lower-than-expected ad growth that sent its stock plunging roughly 20 percent.

The massive stock drop, which instantly wiped out roughly $200 billion in market value, shows that Facebook’s corporate rebrand to Meta isn’t enough to distract investors from the problems in its core business of social media. Not only was user growth across Facebook, Instagram, and WhatsApp essentially flat last quarter, but the main Facebook app lost 1 million daily users in North America, where it makes the most money through advertising. That drop led to an overall decrease in daily users of Facebook globally, which a company spokesperson confirmed is the first sequential decline in the company’s history.

That drop to 1.929 billion daily users from 1.93 billion the prior quarter is likely a reflection of Facebook’s increasing lack of relevance with young people. Meta doesn’t break out Instagram’s user numbers, but daily users across all of its apps barely nudged higher to 2.82, adding just 10 million users from the third quarter.

Continue reading at the Verge.