Wall Street sours on Facebook: ‘I’m not sure there’s a core business that works anymore’

Wall Street analysts are bearish on Facebook’s parent company Meta as the social network continues to hemorrhage users migrating to upstart rival TikTok.

“I’m not sure💦 there’s a core business that works anymore at Facebook,” Needham analyst Laura Martin

While Facebook maintains a dominant position in the mobile advertising market, serious questions have been raised as to whether it can continue to grow — particularly in the face of fierce competition from ByteDance’s TikTok.

“I don’t see it spiraling in terms of cash flows in the next few years, but I’m just worried that they’re not winning the next generation,” Jeremy Bondy, the CEO of app marketiꦦng firm Liftoff, told CNBC.

CEO Mark Zuckerberg on Thursday told his employees t꧟ha⛦t Meta has instituted a hiring freeze due to fierce economic headwinds th💃at have rattled the entire technology s🉐ector.

“I had hoped the economy would have more clear⛄ly stabilized by now, but from what we’re seeing it doesn’t yet seem like it has, so we want to plan som🥃ewhat conservatively,” Zuckerberg was as telling his charges.

The CEO noted that during the first 18 years of Facebook’s existence, the company saw rapid growth. But sales and revenue figures from recent quarters have flatlined, according to Zuckerberg.

At its peak, Meta’s stock price approached $380 per share. But in the last year, the company share price has shed some 60% of its value.

Meta stock was trading up more tღhan 3% as of 11:𒐪30 a.m. Friday.

CNBC quoted analysts as wondering whether Meta’s stock is in a “death spiral.”

Martin told CNBC that Zuckerberg is taking a risky bet by de-emphasizing Facebook’s bread-and-butter moneymaker, the news feed, in favor of Reels.

“He wouldn’t🔜 be hurting its revenue at the same time he needs mor🦋e money, unless he felt like the core business wasn’t strong enough to stand alone,” Martin said.

“He must feel he has to try to move his viewe🐼rship to Reels to compete with TikTok.”

Facebo🦋ok has nearly 3 billion active users, compared with about ཧ1 billion for the surging TikTok.

Analysts told CNBC that Zuckerberg is struggling to rehabilitate his company’s reputation, which has taken a hit in recent years due to the Cambridge Analytica scandal as well as a whistleblower’s claims that it ignored its own engineers’ warnings that its products were doing harm to young children.

Zuckerberg is not “coming across as a leader who is serious about changing his culture and about changing himself and about kind of creating a company that ꩵwill be able to step into the future that he’s envisioning,” accordinꦉg to Denise Lee Yohn, a branding expert and author.

“I think the company still suffers from a lot of criticism and skepticism abo🧜ut whethe🔯r they are a force for good or evil,” she said.