The owner of Facebook and Instagram was hit by a drop in advertising sales in the three months to July, causing the company’s first year-on-year decline in revenue.
Meta’s total revenue fell 1% to $28.8 billion (£23.7 billion), but the company bucked the decline in users.
Analysts worry that the company’s growth may have peaked after years of big profits.
Tiktok have eroded its popularity as more firems compete for ad spend.
Meta, which typically controls more than 20% of the global ad market, has warned investors that ad sales are likely to fall again in the coming months as e-commerce spending falls due to the pandemic boom and companies worry about inflation and the war in Ukraine. spend more carefully.
Teens turning to TikTok and Instagram for news
Mark zuckerberg said; the meta would reduce its hiring steadily over the next year a response to the downturn and the compnay plans to shift investment into new areas,, including its virtual reality platform, Horizon, in a bet that the so-called metaverse is its best prospect for growth.
Those plans have drawn scrutiny from regulators, including the Federal Trade Commission, America’s consumer watchdog, which said it would sue to block Meta’s acquisition of the virtual reality fitness company .
Any payoff from those plans remains years away, with Meta’s struggle to increase its users a sign of limited growth in the years ahead, said Angelo Zino, senior equity analyst at CFRA Research.
Teenagers turn to TikTok and Instagram for news
Meta chief Mark Zuckerberg said the firm will cut its hiring “steadily” next year in response to the downturn and the company’s plans to shift investment into new areas, including its Horizon virtual reality platform, in a bet that the so-called metaverse is its best growth prospects.
Those plans have come under scrutiny from regulators, including the Federal Trade Commission, the U.S. consumer watchdog, which said it would sue to block Meta’s acquisition of fitness company Within Unlimited.
Any payoff from those plans remains years away, with mea push to increase users numbers a sign of limited growth.
He said ; its basically now become a low to growth compnay, early this year facebook reported its first ever decline in daily users.
In response, the company, which also owns WhatsApp, recently changed its algorithms on Instagram and Facebook to work more like TikTok, recommending posts to users outside of the base of accounts they follow.
In June, the company said an average of 1.97 billion people logged on to Facebook each day, up from 1.96 billion in March; and 2.88 billion to one of its apps per day, up from 2.87 billion in March.
Zuckerberg said he was encouraged by signs that people were spending more time on the company’s apps, but profits still fell 36% to $6.7 billion in the quarter.
He said the firm would continue to invest, albeit more slowly than planned.
“We face a number of challenges in the near term, but the investments we are making should pay off…in the long run,” he added.
Meta, whose top two Sheryl Sandberg announced plans to leave the company in June, isn’t the only company facing challenges.
Alphabet, the parent company of Google and YouTube, this week reported its slowest revenue growth since the pandemic in 2020, with executives repeatedly warning investors that the firm was feeling the impact of economic “uncertainty”.
Twitter also reported an unusual drop in revenue, while Snap warned of “incredibly challenging” conditions after its weakest quarter ever, with shares plunging 25%.
Meta’s reliance on small and medium-sized businesses — which are “frightened” by the economy — makes it particularly vulnerable to any market slowdown, said Nikhil Lai, senior performance marketing analyst at Forrester Research.
The company’s fine-tuned ad targeting model was also disrupted last year when Apple overhauled its privacy settings.