Facebook parent Meta posts first revenue decline in history

Jul 27, 2022, 1:27 PM | Updated: Jul 29, 2022, 6:24 am

Meta, the parent company of Facebook and Instagram, posted its first revenue decline in history Thursday, dragged down by a drop in ad spending as the economy falters — and as competition from rival TikTok intensifies.

The results largely followed a broader decline in the digital advertising market that is dinging Meta rivals such as Google, Twitter — which also posted a revenue decline — and Snap. Google’s parent company Alphabet reported its slowest quarterly growth in two years on Tuesday.

CEO Mark Zuckerberg said Meta is slowing its pace of investments and plans to “steadily reduce” employee growth after a hiring blitz earlier this year.

“This is a period that demands more intensity,” he said in a conference call with analysts. “Expect us to get more done with fewer resources.”

Beyond the economic downturn, Meta faces some unique challenges, including the looming departure of its chief operating officer Sheryl Sandberg, the chief architect of the company’s massive advertising business.

In addition to TikTok, the decline in ad spending among the downturn and Apple’s privacy changes, “questions about Meta’s leadership” — including Sandberg’s exit and negative sentiment about the company as a whole — also contributed to the decline, said Raj Shah, a managing partner at digital consultancy Publicis Sapient.

Meta earned profits of $6.69 billion, or $2.46 per share, in the April-June period. That’s down 36% from $10.39 billion, or $3.61 per share, in the same period a year ago.

Revenue was $28.82 billion, down 1% from $29.08 billion a year earlier.

Analysts, on average, were expecting earnings of $2.54 per share on revenue of $28.91 billion, according to a poll by FactSet.

“The year-over-year drop in quarterly revenue signifies just how quickly Meta’s business has deteriorated,” said Insider Intelligence analyst Debra Aho Williamson in an email. “Prior to these results, we had forecasted that Meta’s worldwide ad revenue would increase 12.4% this year, to nearly $130 billion. Now, it’s unlikely to reach that figure.”

She added that the good news — if it could be called that — is that Meta’s competitors are also experiencing slowdowns.

Meta is in the midst of a corporate transformation that it says will take years to complete. It wants to evolve from a provider of social platforms to a dominant power in a nascent virtual reality construct it calls the “metaverse” — sort of like the internet brought to life, or at least rendered in 3D. CEO Mark Zuckerberg has described it as an immersive virtual environment, a place people can virtually “enter” rather than just staring at a screen. The company is investing billions in its metaverse plans that will likely take years to pay off — and as part of its plan renamed itself Meta last fall.

“Expect Meta’s decline to continue until Meta can monetize the metaverse, and begin another Meta-reverse,” Shah said.

Meta forecasts revenue of $26 billion to $28.5 billion for the current quarter, which is below Wall Street’s expectations.

“This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty,” finance chief David Wehner said in a statement. Meta said Wehner is being promoted to chief strategy officer, where he will oversee the company’s strategy and corporate development. Susan Li, currently vice president of finance, will replace him as CFO.

Shares of Meta Platforms Inc. fell $6.88, or 4.1%. to $162.70 in after-hours trading. The stock had closed up $10.43, or 6.6%. at $169.58 on Wednesday in the regular trading session. Meta’s stock has lost more than half its value since the start of this year.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Haitian migrant Gerson Solay, 28, carries his daughter, Bianca, as he and his family cross into Can...
Associated Press

US, Canada to end loophole that allows asylum-seekers to move between countries

President Joe Biden and Canadian Prime Minister Justin Trudeau on Friday announced a plan to close a loophole to an immigration agreement.
1 day ago
Expert skateboarder Di'Orr Greenwood, an artist born and raised in the Navajo Nation in Arizona and...
Associated Press

Indigenous skateboard art featured on new stamps unveiled at Phoenix skate park

The Postal Service unveiled the “Art of the Skateboard" stamps at a Phoenix skate park, featuring designs from Indigenous artists.
1 day ago
(Facebook Photo/City of San Luis, Arizona)...
Associated Press

San Luis authorities receive complaints about 911 calls going across border

Authorities in San Luis say they are receiving more complaints about 911 calls mistakenly going across the border.
7 days ago
(Pexels Photo)...
Associated Press

Daylight saving time begins in most of US this weekend

No time change is observed in Hawaii, most of Arizona, Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam and the Northern Marianas.
15 days ago
Mexican army soldiers prepare a search mission for four U.S. citizens kidnapped by gunmen in Matamo...
Associated Press

How the 4 abducted Americans in Mexico were located

The anonymous tip that led Mexican authorities to a remote shack where four abducted Americans were held described armed men and blindfolds.
15 days ago
Tom Brundy points to a newly built irrigation canal on one of the fields at his farm Tuesday, Feb. ...
Associated Press

Southwest farmers reluctant to idle farmland to save water

There is a growing sense that fallowing will have to be part of the solution to the increasingly desperate drought in the West.
22 days ago

Sponsored Articles

(Desert Institute for Spine Care in Arizona Photo)...
Desert Institute for Spine Care in Arizona

5 common causes for chronic neck pain

Neck pain can debilitate one’s daily routine, yet 80% of people experience it in their lives and 20%-50% deal with it annually.
...
Day & Night Air Conditioning, Heating and Plumbing

Company looking for oldest air conditioner and wants to reward homeowner with new one

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.
(Pexels Photo)...

Sports gambling can be fun for adults, but it’s a dangerous game for children

While adults may find that sports gambling is a way to enhance the experience with more than just fandom on the line, it can be a dangerous proposition if children get involved in the activity.
Facebook parent Meta posts first revenue decline in history