Meta Experiences Fall in Revenue for the first time

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For the first time in the company’s history, Meta the owner of Facebook and Instagram experienced a loss in advertising sales in the three months leading up to July.

Although the firm managed to fight off a fall in users, Meta’s overall sales fell 1% to $28.8 billion (£23.7 billion).

Following years of substantial gains, analysts worry that the company’s growth may have peaked.

While more companies are vying for advertising dollars, rivals like TikTok have reduced its appeal.

As e-commerce spending slows down from its epidemic surge and businesses become more cautious about their spending due to concerns about inflation and the conflict in Ukraine, Meta, which generally controls more than 20% of the global ad market, issued a warning to investors.

In response to the downturn and the company’s intentions to refocus investment in new areas, such as its virtual reality platform, Horizon, in a wager that the so-called metaverse is its best prospect for growth, Meta boss Mark Zuckerberg said the company would reduce its hiring “steadily” over the next year.

The Federal Trade Commission, the nation’s consumer protection agency, said it would file a lawsuit to stop Meta’s acquisition of the virtual reality fitness company Within Unlimited, which is the owner of the app Supernatural, due to antitrust concerns, and other regulators have expressed concern about those plans.

According to Angelo Zino, senior equities analyst at CFRA Research, the success of such objectives is still years away because of Meta’s difficulty attracting new customers, which indicates slow development in the coming years. The corporation has essentially stopped growing, according to him. Facebook announced a drop in daily users earlier this year for the first time ever.

In response, the business—which also owns WhatsApp—recently modified its algorithms on Instagram and Facebook so that they behave more like TikTok, suggesting content to users from accounts other than the ones they follow.

Users have expressed outrage at the actions, probably most notably celebrity Kylie Jenner, who this week shared a message with her more than 360 million Instagram followers saying, “Return Instagram to its original form. Do not attempt to imitate Tiktok. All I want to see are my pals’ adorable pictures.) sincere thanks to all “.

According to the business, 2.88 billion users used one of its applications daily in June, up from 2.87 billion in March, and 1.97 billion individuals logged into Facebook on average every day.

Even though Mr. Zuckerberg expressed satisfaction at indicators that users were spending more time on the company’s apps, the quarter’s profitability nevertheless fell by 36% to $6.7 billion.

Despite investing less quickly than anticipated, he indicated the company would keep making investments.

Tough circumstances for Meta and its competitors

The issues are not exclusive to Meta, whose vice president of strategy Sheryl Sandberg said in June that she would be leaving the company.

Read Also: FTC files for court injunction against Meta

The parent company of Google and YouTube, Alphabet, released its worst revenue growth report this week since the pandemic struck in 2020, and officials repeatedly cautioned investors that the company was suffering the effects of economic “uncertainty.”

While Snap issued an “extremely tough” warning following its lowest quarter ever and reported an unprecedented drop in revenue, Twitter also revealed extraordinary revenue declines.

Because of its reliance on small and medium-sized firms, many of which are “spooked” about the economy, Nikhil Lai, senior analyst for performance marketing at Forrester Research, said Meta is particularly exposed to any market slowdown.

Apple’s revamped privacy settings from the previous year also interfered with the company’s carefully honed model for targeting advertisements.


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Anthony Carter

I’m Anthony and I finished my degree graduate studies on Public Administration and I spend most of my free time in contributing written works about community development, public administration and lifestyle.

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