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Meta has seen its first-ever drop in revenue
Meta has seen its first-ever drop in revenue
Meta has seen its first-ever drop in revenue

Science and Technology

Meta has seen its first-ever drop in revenue

Meta: The owner of Facebook and Instagram was hit by a slump in advertising sales in the three months to July, causing the company’s first year-on-year drop in revenue.

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Meta’s overall revenue fell 1% to $28.8 billion (£23.7 billion), but the company countered the decline in users.

Analysts worry that the company’s growth may have peaked after years of big profits.

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Rivals like TikTok have eroded its popularity as more companies compete for ad spend.

Meta, which typically controls more than 20% of the global ad market. Warned investors that ad sales are likely to fall again in the coming months as e-commerce spending falls. Due to the pandemic boom and companies worry about inflation and the war in Ukraine. spend more carefully.
Meta chief Mark Zuckerberg said the firm will “continue” to cut jobs next year in response to the downturn and the company’s plans. To shift investment into new areas, including virtual reality platform Horizon. In a bet that the so-called metaverse is its own. best growth prospects.

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Meta has seen its first-ever drop in revenue

Those plans have come under scrutiny from regulators, including the Federal Trade Commission. The U.S. consumer watchdog, which said it would sue to block Meta’s acquisition of fitness company Within Unlimited. Which owns the Supernatural app, over monopoly concerns.

Any payoff from those plans remains years away, with Meta’s push to increase user numbers. A sign of limited growth in the coming years, said Angelo Zino, chief equity analyst at CFRA Research.

“It’s basically now become a low-to-no growth company,” he said.

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Facebook reported its first ever decline in daily users

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

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

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The moves sparked outrage from users, perhaps most prominently from celebrity Kylie Jenner. Who this week shared a post with her more than 360 million Instagram followers that read: “Make Instagram Instagram again. (stop trying to be Tiktok, I just want to see cute pictures of my friends.) Hello everyone.”
But changes can help.

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

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Zuckerberg said he was encouraged by signs that people were spending more time on the company’s apps, but profits still fell 36% to $6.7 billion in the quarter.

He said the firm would continue to invest, albeit more slowly than planned.

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“We face a number of challenges in the near term, but the investments we are making should pay off…in the long run,” he added.

‘challenging conditions’


Meta, whose top two Sheryl Sandberg announced plans to leave the company in June, isn’t the only company facing challenges.

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Alphabet, the parent company of Google and YouTube. This week reported its slowest revenue growth since the pandemic in 2020. With executives repeatedly warning investors that the firm was feeling the impact of economic “uncertainty”.

Twitter also reported an unusual drop in revenue, while Snap warned of “incredibly challenging” conditions after its weakest quarter ever. With shares down 25%.

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“If you look at the advertising space right now … growth is deteriorating at a very rapid rate. Much faster than most people expected,” Mr. Zino said.

Meta’s reliance on small and medium-sized businesses that have been “scared” by the economy makes it particularly vulnerable to any market slowdown, said Nikhil Lai. Senior performance marketing analyst at Forrester Research.

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

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