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Facebook & Instagram's parent company Meta has posted its first-ever revenue decline, dragged down by a drop in ad spending as the economy falters, and increasing competition from rival TikTok.

Source : PortMac.News | Retail :

Source : PortMac.News | Retail | News Story:

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Facebook reports first-ever loss for global tech giant
Facebook & Instagram's parent company Meta has posted its first-ever revenue decline, dragged down by a drop in ad spending as the economy falters, and increasing competition from rival TikTok.

News Story Summary:

Meta's stock dropped only slightly following the results, suggesting Wall Street was largely expecting the weak earnings report.

The company's total revenue, comprised almost entirely of ad sales, fell 1 per cent to $US28.82 billion ($41.1 billion) in the June quarter, nearly half a billion from last year.

The results follow a broader decline in the digital advertising market that is dinging rivals such as Snap and Alphabet, Google's parent company, which reported its slowest quarterly growth in two years.

The results shed light on the unique strain Meta's core social media business is experiencing, as it competes for users' time with short video app TikTok and adjusts its ads business to privacy controls rolled out by Apple last year.

Meta said Reels, a short video product it was increasingly inserting into users' feeds to compete with TikTok, was now generating more than $US1 billion in annual revenue.

"They are being greatly affected by everything, and I'd probably give it a third, a third and a third," Bokeh Capital Partners' Kim Forrest said, referring to the economy, global ad market slowdown, and competition from TikTok and Apple.

"Meta has a problem because they're chasing TikTok and if the Kardashians are talking about how they don't like Instagram… Meta should really pay attention to that."

Monthly active users on Facebook also came in slightly under expectation, though the silver lining for the digital giant is that Meta's competitors are also experiencing slowdowns.

Snap Inc and Twitter both missed sales expectations and warned of an ad market slowdown, sparking sell-offs across the sector.

However, Alphabet, the world's largest digital ad platform, reported a rise in quarterly revenue, with sales from its biggest money-maker — Google search — topping investor expectations.

Exploring the 'metaverse':

About 15% of content on Facebook and Instagram is recommended by AI and that percentage will double by the end of 2023, according to chief executive Mark Zuckerberg.

The world's biggest social media company is carrying out several expensive overhauls to keep that core business pumping out profits, while also investing in a longer-term bet on the "metaverse" — a risky gamble that's still in its nascent stage.

The metaverse is sort of the internet brought to life, or at least rendered in 3D. Mr Zuckerberg has described it as a "Virtual environment" in which you can immerse yourself instead of just staring at a screen.

The company is investing billions on its metaverse plans that will likely take years to pay off, and as part of its plan renamed itself Meta last fall.

But the challenge will be how the company can monetise this new digital space.

For now, the metaverse part of the business remains largely theoretical.

In the second quarter, Meta reported $US218 million in non-ad revenue, which includes sales of devices like its Quest virtual reality headsets, down from $US497 million last year.

Above | Meta has also faced some unique challenges, including the looming departure of its chief operating officer Sheryl Sandberg, the chief architect of the company's massive advertising business.

Sources | ABC & Wires


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