Meta, the parent company of Facebook and Instagram, reported its first revenue decline in history on Thursday. It was dragged down by a drop in ad spending as the economy falters — and as competition from rival TikTok intensifies. Results largely followed a broader decline in the digital advertising market, which has harmed Meta rivals such as Google, Twitter and Snap.
After a hiring spree earlier this year, CEO Mark Zuckerberg said Meta is slowing its investment pace and plans to ‘steadily reduce’ employee growth. The impending departure of Sheryl Sandberg, the chief architect of the company’s massive advertising business, is one of the biggest challenges Meta faces.
In the April-June quarter, Meta earned USD 6.69 billion in profits, or USD 2.46 per share. Revenue was USD 28.82 billion, down 1% from USD 29.08 billion the previous year. In addition to TikTok, the decline in ad spending, and Apple’s privacy changes, ‘questions about Meta’s leadership’ contributed to the decline.
Revenue for the first quarter of 2015 fell from USD 28.91 billion in the same period a year earlier, to just USD 2.54 per share on sales of USD 27.65 billion. Analysts had expected revenue to rise by 12.4 per cent, but that figure is unlikely to be reached now. ‘The year-over-year drop in quarterly revenue demonstrates how quickly Meta’s business has deteriorated’, said Insider Intelligence analyst Debra Aho Williamson.
‘Expect Meta’s decline to continue until Meta can monetize the metaverse and begin another Meta-reverse,’ Shah predicted. CEO Mark Zuckerberg has described it as an immersive virtual environment, one that people can virtually ‘enter’ rather than simply staring at a screen. The company is investing billions in plans that will most likely take years to pay off — and as part of that plan, it renamed itself Meta last fall.
Meta Platforms Inc. shares fell USD 6.88, or 4.1 percent, to USD 162.70 in after-hours trading on Thursday. ‘This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter,’ finance chief David Wehner said in a statement. Wehner has been promoted to chief strategy officer, where he will oversee the company’s strategy and corporate development.
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