Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Wednesday, Feb 08, 2023

Facebook owner Meta in first ever sales fall

Facebook owner Meta in first ever sales fall

The owner of Facebook and Instagram was hit by a fall in advertising sales in the three months to July which caused the first year-on-year revenue decline in the firm's history.

Meta's total revenue slipped 1% to $28.8bn (£23.7bn), but the company fended off a decline in users.

Analysts fear the company's growth may have peaked after years of large gains.

Rivals such as TikTok have eroded its popularity, while more firms are competing for ad spending.

Meta, which typically commands more than 20% of the global ad market, warned investors that ad sales were likely to fall again in the months ahead, as e-commerce spending falls from its pandemic boom and companies worried about inflation and the war in Ukraine spend more cautiously.

Meta boss Mark Zuckerberg said the firm would reduce its hiring "steadily" over the next year, a response to the downturn and the company's 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 Within Unlimited, which owns the app Supernatural, over monopoly concerns.

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.

"Essentially it's now become a low-to no-growth company," he said.

Earlier this year, Facebook reported its first ever decline in daily users.

In response, the company, which also owns WhatsApp, recently shifted its algorithms on Instagram and Facebook to act more like TikTok, recommending posts to users from outside the base of accounts they follow.

The moves have drawn outcry from users, perhaps most prominently celebrity Kylie Jenner, who shared a post with her more than 360 million followers on Instagram this week saying "Make Instagram Instagram again. (stop trying to be Tiktok I just want to see cute photos of my friends.) Sincerely, everyone".

Kylie Jenner has criticised the changes Meta has made to try to compete with TikTok


But the changes may be helping.

In June, the company said 1.97 billion people logged into Facebook on average each day, up from 1.96 billion in March; and 2.88 billion into one of its apps daily, up from 2.87 billion in March.

Mr Zuckerberg said he was pleased by signs that people were spending more time on the firm's apps, but profits in the quarter still dropped 36% to $6.7bn.

He said the firm would continue to invest, though at a slower pace than planned.

"We face a number of challenges in the near term, but the investments we're making should give us...advantage over the long term," he added.


'Challenging conditions'


Meta, whose number two in command Sheryl Sandberg in June announced plans to leave the company, is not the only firm facing challenges.

Alphabet, the parent company of Google and YouTube, this week reported its slowest revenue growth since the pandemic hit in 2020, with executives repeatedly warning investors that the firm was feeling the impact of economic "uncertainty".

Twitter also reported an unusual fall in revenue, while Snap warned of "incredibly challenging" conditions after its weakest quarter ever, sending shares plunging 25%.

"When you look at the ad space right now...growth is deteriorating at a very fast pace, much faster than most people had anticipated," Mr Zino said.

Meta's reliance on small and medium-sized businesses - which are "spooked" about the economy - makes it particularly vulnerable to any market slowdown, said Nikhil Lai senior analyst for performance marketing at Forrester Research.

The company's fine-tuned model for targeting adverts was also disrupted last year when Apple overhauled its privacy settings.

Newsletter

Related Articles

Hong Kong News
Close
0:00
0:00
2 earthquakes in Turkey killed over 2,300 people
Powerful Earthquake Strikes Turkey and Syria, Killing More Than 1,300 People.
Turkish photographer Ugur Gallenkus portrays two different worlds within a single image. Brilliant work
Charlie Munger, calls for a ban on cryptocurrencies in the US, following China's lead
Hong Kong airlines taking bold action after the years of pandemic lockdown and travel restrictions, to make Hong Kong great again
EU found a way to use frozen Russian funds
First generation unopened iPhone set to fetch more than $50,000 at auction.
WARNING GRAPHIC CONTENT - US Memphis Police murdering innocent Tyre Nichols
Almost 30% of professionals say they've tried ChatGPT at work
Interpol seeks woman who ran elaborate exam cheating scam in Singapore
Chinese search giant Baidu to launch ChatGPT like AI chatbot.
What is ChatGPT?
Bill Gates is ‘very optimistic’ about the future: ‘Better to be born 20 years from now...than any time in the past’
China is opening up for foreign investors.
Tesla reported record profits and record revenues for 2022
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Federal Reserve Probes Goldman’s Consumer Business
China's first population drop in six decades
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
China relaxes 'red lines' on property sector borrowing in policy pivot
Tesla slashes prices globally by as much as 20 percent
Japan prosecutors indict man for ex-PM Shinzo Abe murder
Vietnam removes two deputy PMs amid anti-corruption campaign
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
After Failing To Pay Office Rent, Twitter May Sell User Names
FIFA president questioned by prosecutors
Britain's Sunak breaks silence and admits using private healthcare
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
China’s recovery could add 1% to Australia’s GDP: JPMorgan 
Saudi Arabia set to overtake India as fastest-growing major economy this year 
China vows to strengthen financial support for enterprises: official
International medical experts speak out against COVID-19 restrictions on China
2 Billion People To Travel In China's "Great Migration" Over Next 40 Days
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
Flight constraints expected to weigh on China travel rebound
Billionaire Jack Ma relinquishes control of Ant Group
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
Teslas now over 40% cheaper in China than US
TikTok CEO Plans to Meet European Union Regulators
UK chaos: Hong Kong emigrants duped by false prospectus
China seeks course correction in US ties but will fight ‘all forms of hegemony’, top diplomat Wang Yi says
China will boost spending in 2023
African traders welcome end of China’s Covid travel curbs
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Will Canada ever become a real democracy?
Hong Kong property brokerages slash payrolls in choppy market
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
×