Meta Platforms Inc.'s (NASDAQ:FB) fourth-quarter disappointment was partly blamed on competition from short-video app TikTok.
An analyst at Ark Invest suggested TikTok would prove to be a "formidable foe" for the social media giant.
What Happened: Meta CEO Mark Zuckerberg mentioned the TikTok competition as one of the reasons for the company's disappointing guidance.
TikTok is taking a significant share of consumer mindshare and is posing a threat to Meta, Ark Invest analyst Nicholas Grous said in a note.
TikTok is the only non-Meta-owned app to reach 3 billion downloads globally, the analyst noted. Meta is attempting to take on TikTok with its Reels, a short-form video platform on its Instagram subsidiary, he added.
"Given its focus on The Metaverse, we are wondering if Meta has the DNA and time to compete on the short-form video front," Grous said.
TikTok's differentiation, the analyst said, is its superior suite of high-end video creation and editing tools, of which Reels has no match.
Related Link: Instagram Reels Vs. TikTok Vs. YouTube Shorts Vs. Snapchat Spotlight: How Social Video Apps Stack
Why It's Important: Meta and its smaller rival Snap Inc (NASDAQ:SNAP) have both implied at their respective earnings calls that the future of social media will look like TikTok.
Zuckerberg shared at a company-wide virtual meeting that it is important to focus on growing Meta's short-video product as it faces an "unprecedented level of competition" from TikTok, Bloomberg reported, citing a person who attended the meeting.
For now, it appears TikTok has the upper hand, given Meta's divided focus amid multiple risks, including the impact from Apple Inc.'s (NASDAQ:AAPL) privacy changes and an uncertain foray into Metaverse.
At last check, Meta shares were down 4.13% to $227.31 Monday afternoon at publication.