Meta revenue drops for the first time

new York Facebook owner Meta has seen its first revenue drop since going public in 2012. In the second quarter, revenues fell slightly by one percent to $ 28.8 billion, as the world’s largest social network announced on Wednesday after the US stock market closed.

The profit even collapsed by 36 percent to 6.6 billion dollars. This is also related to the higher costs. With around 83,500 employees, Meta currently has around a third more than a year ago.

The group, which owns services such as Facebook, WhatsApp and Instagram, is also skeptical for the current quarter and has a wide range of sales from 26.0 to 28.5 billion dollars. A renewed decline is therefore likely. In the third quarter of 2021, Meta had generated almost $28.3 billion.

Meta recorded slight growth in the number of users on its platforms. However, the group was not able to translate this into higher income. This was also due to advertising restrictions due to new data protection regulations from Apple, which primarily affected iPhone users. “The entire industry is working together constructively to meet this challenge,” Meta explained in the conference call in the evening.

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“I’m trying to get the company to adapt faster to change,” said founder Mark Zuckerberg. “The market is very competitive. We are consistently working to keep improving.” According to Zuckerberg, nothing has changed since the company was founded in his room in the student residence.

worries on the stock market

The figures were poorly received on the stock exchange, the share was around four percent down after trading. Wall Street is concerned that tech stocks will continue to plummet. Just last week, Snap and Twitter presented alarming numbers. On Tuesday evening, solid results at Microsoft and Google’s advertising business, which was growing contrary to the trend, provided cautious relief on the tech market.

However, Meta is now reporting a drop. And as it became known on Wednesday, the group is also threatened with trouble with the antitrust authorities: US competition authorities are targeting the group’s strong market position in the virtual reality (VR) business for the first time. The FTC went to court to prevent Meta from buying a developer company.

“The setbacks for Meta continue,” commented analyst Laura Hoy of finance house Hargreaves Lansdown. “The unimpressive results confirm fears that ad revenue is drying up.” Hoy saw “little reason to be happy: declines and disappointments everywhere, including a bleak third-quarter outlook.”

The number of users of Meta’s family of apps has continued to grow, “albeit slowly, and the company is still debt-free. But otherwise the numbers were bleak,” was the analyst’s verdict. The FTC’s efforts to prevent Meta’s planned acquisition of VR company Within are “not just an affront to Zuckerberg’s vision of a digital future, but a shot in the bow of the entire industry.” Its major corporations, including Google, are striving after monopolies.

The Metaverse as a cost driver

According to Raj Shah of consulting firm Publicis Sapient, five factors contributed to the second-quarter earnings decline: competition from TikTok, reduced ad spending amid the economic downturn, Apple’s privacy changes, reputation issues and questions about the future of the meta leadership.

In fact, some things will change at the top of the group. Organization director Sheryl Sandberg, long number two after Zuckerberg, leaves the company in September. Chief Financial Officer David Wehner will be in charge of corporate strategy in the future. The new chief financial officer will be Susan Li, previously the deputy head of finance.

“Meta’s big bet on the Metaverse will be a cost driver for years to come,” adviser Shah believes. It is expected that Meta’s decline will continue until the group can monetize the Metaverse. Digital advertising remains an undervalued growth market.

In 2021, Zuckerberg had set the goal of establishing a virtual world – the “Metaverse” – as a network of different social Internet platforms, and changed the company name from Facebook to Meta. Since then, many industry observers have doubted the feasibility of the vision.

Controversial takeover plan

In so-called virtual reality, users with special glasses can immerse themselves in digital worlds. Zuckerberg went into business early on by buying VR glasses pioneer Oculus in 2014. The company Within, which wants to buy Meta, is behind a VR fitness app called “Supernatural”. The FTC regulator argues that Meta with its “VR empire” wants to occupy the new market by buying it out instead of competing for it with its own offers.

According to the lawsuit filed on Wednesday, the takeover could lead to less competition and potentially higher prices. “And Meta would be one step closer to the ultimate goal of owning the entire ‘Metaverse.'” Meta already owns the motion-focused VR app Beat Saber. The group has taken over several VR specialists in recent years. According to a media report, Meta wants to spend more than 400 million dollars on the purchase of Within that was announced in the fall.

Meta countered that the FTC’s lawsuit was based on “ideology and speculation” rather than facts. The idea that the acquisition would be anti-competitive is “unbelievable,” a company spokesman told technology blog The Verge.

Under its new boss Lina Khan, the FTC is taking a tougher stance against the big tech companies, which have long benefited from rather lax competition regulation in the United States. The tech giant Apple will present figures on Thursday.

With agency material.

More: The advertising business at Snap is collapsing, dragging down corporations like Meta and Google.

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