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In the three months prior to July, advertising income fell sharply, causing Meta, the parent company of Facebook and Instagram, to experience its first-ever year-over-year revenue decrease.
Despite a 1% decline in overall sales to $28.8 billion (£23.7 billion), Meta was able to fend off a decline in users.
Analysts are concerned that the company’s growth may have peaked after years of tremendous advances.
Although more companies are vying for advertising cash, TikTok and other rivals have lowered their popularity.
As e-commerce spending slows down from its pandemic boom and businesses become more frugal with their spending due to concerns about inflation and the conflict in Ukraine, Meta, which typically holds more than 20% of the global ad market, warned investors that ad sales were likely to decrease once more in the months to come.
The CEO of Meta, Mark Zuckerberg, announced that the company would reduce hiring “steadily” over the coming year in response to the downturn and its plans to refocus investment into new areas, such as Horizon, its virtual reality platform, in an effort to capitalize on the so-called metaverse, which he believes will be its best opportunity for growth.
Due to monopolistic concerns, the Federal Trade Commission, the government’s consumer protection agency, announced it would sue to halt Meta’s acquisition of virtual reality fitness firm Within Unlimited, the software Supernatural owner.
Read Also: FTC drags Facebook parent-company Meta to court
According to CFRA Research’s senior equities analyst Angelo Zino, achieving such goals is still years away due to Meta’s struggles with user growth. He asserted that the corporation had had little to no growth recently.
Earlier this year, Facebook revealed its first-ever decline in daily users. Because of this, the business—which also owns WhatsApp—recently modified the algorithms on Instagram and Facebook so that they act more like TikTok, suggesting postings to users from accounts different than the ones they already follow.
Users have voiced concern over the activities, most notably superstar Kylie Jenner, who tweeted a message to her more than 360 million Instagram followers last week stating, “I am so appalled by these actions.” “Restore Instagram to its original form. Sincere thanks to everyone (stop trying to be Tiktok, I want to look at your cute images.) “.
The company claims that 1.97 billion people log into Facebook on average every day, up from 1.96 billion in March, and that 2.88 billion people use one of its products every day, up from 2.87 billion in March.
Revenues for the quarter decreased by 36% to $6.7 billion, despite Mr. Zuckerberg expressing pleasure with signs that customers were spending more time on the company’s products.
He vowed that the corporation would continue to invest at a slower pace than expected.
Difficult circumstances for Meta and others
Sheryl Sandberg, the vice president of strategy at Meta, announced in June that she would be leaving the firm due to its problems.
Read Also: Sheryl Sandberg to step down from her role as COO at Facebook parent-company Meta
This week, alphabet, the parent firm of Google and YouTube, reported its worst revenue growth since the pandemic hit in 2020, despite officials constantly informing investors that the company was feeling the effects of economic “uncertainty.”
Twitter and Snap both issued “very tough” warnings after their poorest quarterly results, which resulted in a 25 percent loss in share price, in addition to reporting an exceptional decline in revenue.
Nikhil Lai, a senior analyst for performance marketing at Forrester Research, asserts that because of its reliance on small and medium-sized businesses, which are “spooked” about the economy, Meta is particularly vulnerable to any market slump.
Apple’s well-refined targeting system for adverts was upset when it altered its privacy settings last year.
