For the first time in Facebook's 18-year existence, the number of daily active users (DAUs) has decreased.
DAUs declined to 1.929 billion in the three months to the end of December, down from 1.930 billion the previous quarter, according to Facebook's owner Meta Platforms.
In addition, the company cautioned that revenue growth will decelerate due to competition from rivals such as TikTok and YouTube, as well as advertisers pulling back on spending.
In New York after-hours trade, Meta's stock dropped by more than 20%.
The fall in Meta's stock price took off about $200 billion (£147.5 billion) from the company's market capitalization.
Other social media services, such as Twitter, Snap, and Pinterest, saw their shares plummet as well.
The company's sales growth has been hampered, according to CEO Mark Zuckerberg, since audiences, particularly younger users, have defected to competitors.
Meta, which operates the world's second-largest digital advertising network behind Google, claimed it was also impacted by Apple's operating system's privacy modifications.
According to Meta's chief financial officer Dave Wehner, the changes have made it more difficult for marketers to target and assess their advertising on Facebook and Instagram, and might cost them "in the neighborhood of $10 billion" this year.
In the time, Meta's overall revenue, which is primarily made up of advertising revenues, increased to $33.67 billion, slightly exceeding market expectations.
It also projected sales of $27 billion to $29 billion for the coming quarter, which is lower than experts had predicted.
While the firm has made its own video investments to compete with TikTok, which is controlled by Chinese internet giant ByteDance, the corporation generates less money from these products than it does from its standard Facebook and Instagram feeds.
Mr Zuckerberg expressed confidence that the investments in video and virtual reality will pay off in the same way that previous bets on mobile advertising and Instagram stories had.
But, he noted, the firm didn't have to contend with a major rival during previous shifts in strategy.
"The teams are executing quite well and the product is growing very quickly," he said. "The thing that is somewhat unique here is that TikTok is so big a competitor already and also continues to grow at quite a fast rate."
Meta on the wane?
Facebook has always been a platform that grows.
For every quarter in its existence the global numbers have been in one direction.
Yet in the last few years, growth has stalled in Europe and US. That was masked by rises in users from the rest of the world.
Facebook isn't as popular among teenagers as it once was. TikTok, by its own admission, is harming its company.
Investors are concerned about Meta for a variety of reasons.
Because it wished to focus on the Metaverse, Meta altered its name. But Meta isn't even close to creating a Metaverse; it's still a pipe dream.
Instead, it's pouring billions of dollars into attempting to build one, all because Mark Zuckerberg believes there's a market for it - a tremendous gamble.
Is it possible that purchasing TikTok would solve Meta's immediate problems? Because of anti-competition regulations, US officials would never approve it.
And Facebook is now seen by many in Silicon Valley as a poisonous brand. It's certainly not a cool place to work in the same way it was say ten years ago.
That makes attracting talent more difficult.
Meta has some serious problems going forward. This milestone could be just the beginning.
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