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Meta, the company formerly known as Facebook, suffered its biggest one-day extinction ever on Thursday as its shares fell 26 percent and its market cap fell more than $250 billion.

The accident followed a dismal earnings report On Wednesday, when CEO Mark Zuckerberg explained how the company was moving a difficult transition from the social network to the so-called virtual world of the metaverse. On Thursday, a company spokesperson reiterated the comments from the earnings announcement and declined to comment further.

Here are six reasons Meta is in trouble.

User growth has reached a ceiling.

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

While the company posted modest gains in new users in its so-called family of apps on Wednesday, which includes Instagram, Messenger and WhatsApp, the core Facebook social networking app lost nearly half a million users in the fourth quarter compared to the previous quarter.

This was the first such drop for the company in its 18-year history, and during that time, it was practically defined by its ability to bring in more new users. The drop signaled that the core implementation may have peaked. Meta’s quarterly user growth rate was also the slowest growth rate in at least three years.

Meta’s executives pointed to other growth opportunities, such as turning on the money tap in messaging service WhatsApp, which has yet to generate significant revenue. However, these efforts are still in their infancy. Investors will then examine whether Meta’s other apps like Instagram will start to peak in user growth.

Apple’s changes limit Meta.

Last spring, Apple launched a “Application Monitoring TransparencyThe update to the mobile operating system essentially gives iPhone owners the choice of whether to allow apps like Facebook to track their online activity. These secrecy moves have now done harm Meta’s job and they will probably continue to do so.

Now that Facebook and other apps have to explicitly ask people for permission to monitor their behavior, many users have disabled this option. This means less user data for Facebook, making it more difficult to target ads, which is one of the company’s main ways of making money.

It’s doubly painful that iPhone users are a much more lucrative market for Facebook advertisers than Android app users. People who use iPhones to access the Internet generally spend more money on products and apps offered to them than mobile ads.

Meta said Wednesday that Apple’s changes will cost $10 billion next year. The company has opposed Apple’s shifts, saying they’re bad for small businesses that rely on ads on the social network to reach customers. But Apple is unlikely to reverse the privacy changes, and Meta’s shareholders know it.

Google is stealing its share of online advertising.

Meta’s troubles became the fate of its rivals.

On Wednesday, Meta’s chief financial officer, David Wehner, noted that as Apple’s changes give advertisers less visibility into user behavior, many are starting to shift their advertising budgets to other platforms. So Google.

In Google’s earnings call This week, the company reported record sales, particularly in e-commerce search advertising. This was the same category that triggered Meta in the last three months of 2021.

Unlike Meta, Google is not heavily dependent on Apple for user data. Mr Wehner said Google is likely to have “a lot more third-party data for measurement and optimization purposes” from Meta’s advertising platform.

Mr. Wehner also pointed out that Google’s deal with Apple makes it the default search engine for Apple’s Safari browser. This means that Google’s search ads tend to appear in more places, taking in more data, which can be useful to advertisers. This is a big problem for Meta in the long run, especially if more advertisers switch to Google search ads.

TikTok and Reels present a conundrum.

For over a year, Mr. Zuckerberg has pointed out how tough TikTok is as an enemy. The Chinese-powered app has reached over a billion users behind its highly shareable and oddly addictive short video posts. And it competes fiercely with Meta’s Instagram for eyeballs and attention.

Meta cloned TikTok with a video product feature called Instagram Reels. Mr. Zuckerberg said Wednesday that Reels, prominently embedded in people’s Instagram feeds, is now the #1 engagement driver across the app.

The problem is that while Reels attracts users, it doesn’t monetize as effectively as Instagram’s other features like Stories and the main feed. This is because monetization is slower from video ads as people tend to skip ads. This means that the more Instagram pushes people to use Reels, the less money it can make to those users.

Mr. Zuckerberg likened the situation to a similar time a few years ago. Instagram introduced its Stories Feature that is a clone of Snapchat. This product didn’t make much money for the company when it launched, but ad dollars eventually followed. There’s no guarantee that Instagram Reels can repeat that magic, though.

Spending it on metadata is nonsense.

Mr. Zuckerberg is so convinced that the next generation of the internet is the meta-universe, a still fuzzy and theoretical concept that involves people moving around in different virtual and augmented reality worlds – he’s willing to spend big on it.

It’s so big that spending exceeded $10 billion last year. Mr. Zuckerberg hopes to spend even more in the future.

There is no evidence that the bet will pay off, though. Unlike Facebook’s move to mobile devices in 2012, the use of virtual reality is still the domain of niche hobbies and has yet to truly enter the mainstream. Common augmented reality headsets are also months – if not years – away.

In essence, Mr. Zuckerberg wants his employees, users and investors to believe in him and his metaverse vision. That’s a huge desire for something that will cost the company billions of dollars in the coming years and may never come to fruition.

The antitrust specter appears.

The threat of Washington regulators coming in for Mr. Zuckerberg’s company is a headache that never goes away.

Meta faces multiple investigations over whether it has acted anticompetitively, including a newly aggressive Federal Trade Commission and multiple state attorneys generals. Lawmakers also united around congressional efforts to pass antitrust laws.

Mr. Zuckerberg argued that Meta is not a social network monopoly. TikTok angrily pointed to what it called “unprecedented levels of competition” including Apple, Google and other future competitors.

But the threat of antitrust action has made it even harder for Meta to break into new social networking trends. In the past, Facebook has bought Instagram and WhatsApp with little scrutiny because these services have gained billions of users. Now, even some of Meta’s seemingly less controversial acquisitions virtual reality and GIFs challenged by regulators globally.

It is Meta’s responsibility to renew the way out of any difficulty, as it is less likely to make deals.

In the past, doubts may have been given to Mr. Zuckerberg that he could do this. But at least on Thursday, faith was lacking on Wall Street.