The parent company of Facebook, Meta Platforms, posted its first-ever revenue decline on Wednesday.
The company’s revenue in the second quarter fell by 1% to $28.8 billion (€28.3 billion), which was also below Wall Street projections.
The company cited a fall in advertising revenue, thanks to recession fears, a strong US dollar, and increased competition as the reasons behind the drop.
Facebook is the world’s largest social networking platform.
The internet giant also owns Instagram, WhatsApp, and Oculus, and is making inroads into the metaverse space.
“This is a period that demands more intensity,” Meta CEO Mark Zuckerberg told analysts on a conference call on Wednesday. “Expect us to get more done with fewer resources.”
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.
The company said it expects third-quarter revenue of between US$26 billion and US$28.5 billion. Analysts were expecting US$30.52 billion, according to IBES data from Refinitiv.
The company reported mixed results for user growth.
Monthly active users on flagship social network Facebook came in slightly under analyst expectations at 2.93 billion in the second quarter, an increase of 1 percent year over year, while daily active users handily beat estimates at 1.97 billion.
The slower pace of user growth for the past three years is mostly due to defections triggered by the rising popularity of TikTok, Snapchat, and other social media apps. TikTok, the Chinese video sharing service, has replaced Snap to become the favorite social app among teenagers, according to a survey conducted by Piper Sandler this year. The platform became a favorite for the influencer set who made it their primary way to provide content to fans.
Most of the Nasdaq gains came after the United States Federal Reserve raised-
interest rates by 75 basis points, as expected. Some investors viewed comments by Fed chair Jerome Powell as signaling that the Fed’s fight to tame decades-high inflation could be done by year-end.
Data due out on Thursday will show how much the US economy expanded – or shrank – in the June quarter.