The Facebook group Meta has reported its first decline in sales and blames it on economic fears. Meta does not expect an improvement for the next few months either.
The development is tantamount to the end of an era: Since the IPO in 2012, things have only gone up rapidly. Founder and CEO Mark Zuckerberg said the company wants to focus on the long term.
Digital policy, regulation, artificial intelligence: the briefing on digitization
Meta revenue fell about 1 percent year over year to $28.8 billion in the second quarter. The bottom line is that profits shrank by 27 percent to almost 6.7 billion dollars (around 6.6 billion euros).
Top executive Sheryl Sandberg also pointed to the strong dollar leading to an unfavorable translation of foreign earnings on the balance sheet. Without the rise in the dollar exchange rate, there would have been a three percent increase in sales, she emphasized in a conference call with analysts.
The revenue forecast for the current quarter was lower than analysts had expected, ranging from $26 billion to $28.5 billion. CFO Dave Wehner cited the weakening of the online advertising market, which was already noticeable in the second quarter, in view of the economic uncertainty.
So far, Facebook and Meta have shown themselves to be resilient to all economic downturns. With knowledge of the interests and social connections of billions of users, the platform offered advertisers the ability to target their ads to the desired audiences.
But the first cracks in the system appeared last year after Apple introduced new rules to protect privacy. Developers like Facebook are now required to explicitly ask iPhone users for permission if they want to track their behavior across different apps and services. Many users rejected this – and the torpedoed ad models on Facebook, among others.
The number of users who access at least one app from the group every day rose from 2.87 to 2.88 billion within three months. Facebook saw an increase from 1.96 to 1.97 billion daily users. The group also includes Instagram and WhatsApp.
According to the figures, investors initially dropped the share by around five percent in after-hours trading, and the price later recovered to a minus of 2.80 percent.
Meta also announced a change in leadership on Wednesday. The previous CFO Wehner is to take over the newly created position of strategy chief in November. The new chief financial officer will be Susan Li.
A gap opened up on the executive floor after Sandberg announced her retirement. She was regarded as Zuckerberg’s right-hand man and an architect of Facebook’s business model.
Among Zuckerberg’s long-term initiatives is the company’s focus on the “metaverse” – a virtual world into which he envisions business and social life will shift. Facebook pioneered the movement with its virtual reality (VR) activities, which see users wearing special glasses immersing themselves in digital worlds.
