Categories: Tech

Meta is in trouble: Facebook’s parent company records its first revenue drop

MetaMark Zuckerberg’s company and formerly known as Facebook, appears to have had a setback for the first time in more than ten years. In fact, the latest revenue reports showed the first decline since its inception: is the incredible money machine in trouble?

The revenues of Meta – formerly Facebook – drop for the first time in history

The society Metamother of the social network Facebook, recorded its first annual decline in revenue for the second quarter, announcing a 1% decrease to $ 28.8 billion and predicting that growth in the third quarter could decline further. Furthermore, Meta’s net profit it fell 36% to $ 6.7 billion. The division Reality Labsresponsible for the realization of Mark Zuckerberg’s metaverse dreams, lost $ 2.8 billion in the quarter.

The first ever drop in revenue growth certainly does not come as a bolt from the blue: on Wall Street it was expected, it was just a matter of time and waiting for the new report. But the report sheds further light on how quickly Meta’s business became challenged on all fronts.

The reasons are many, and Apple is also among the culprits. Yes, because the new warning that allows you to choose that the app does not track the activities that take place within it made Facebook ads much less effective. This cost Meta 10 billion dollars in ad revenue last year alone. And now, as if that weren’t enough, a rapid economic slowdown has caused advertisers to revise their advertising budgets.

Meanwhile, in its effort to compete with TikTok, Meta is redesigning Facebook and Instagram to put an emphasis on short videos – Reel – and posts that his system recommends to people. In a call with analysts, Zuckerberg said the percentage of content people see on Facebook and Instagram from accounts they don’t follow will double next year. Building the Artificial Intelligence needed to make it happen is a expensive investmenthe has declared.

Active Facebook users, however, are growing

While the revenue figures from Meta and Facebook are far from positive, the company manages to keep up with a steady growth in active users. Facebook, in fact, recorded a 3% growth in daily users, to 1.97 billion, reversing a worrying decline in users seen a couple of quarters ago. Meta reported that 2.88 billion people now use its suite of social apps – Facebook, Messenger, Instagram and WhatsApp – every day, with a 4% increase over a year ago.

Most Facebook users are active thanks toincreased video consumption found in the “Watch” tab. These, who are none other than Reel present on the blue social network, they are monetizing faster than Stories did after the company copied that format from Snapchat several years ago. In the long run, Meta predicts that the Reels will be a big source of income, although for now the priorities are different and the gains from those videos are not many.

It is therefore early to say whether Facebook has really entered a period of crisis, since earnings are affected by problems that affect all social networks and apps in general. The economic crisis and Apple’s decision to allow not to track activities in an application are in fact having an effect on many companies. All that remains is to wait for the next reports and hope that Facebook and Meta, as they have often done, succeed in reverse the trend.

Published by
Walker Ronnie

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