For the first time since IPO
Facebook sales are falling
07/27/2022, 11:13 p.m
The Facebook parent company Meta struggled with a weak advertising environment in the second quarter. Sales and profits slip significantly. The management also gives a gloomy outlook for the current quarter.
Facebook’s parent company Meta has felt the effects of declining advertising budgets around the world and suffered the first drop in sales since its IPO in 2012. In the second quarter, revenues fell slightly by one percent to $ 28.8 billion, as the group announced after the US stock market closed. This means that sales were still below the expectations of analysts, who had already forecast a weak quarter after the problems at Snap and Twitter.
The share fell around five percent in after-hours trading – also because the outlook is not very optimistic. Like Google and Microsoft, the group from Palo Alto is suffering from the strong dollar and the global economic slowdown. However, the online advertising industry leader Google did better than expected in the past quarter, which should also affect the number two meta. The group, founded and managed by Mark Zuckerberg, to which services such as Facebook, WhatsApp and Instagram belong, is also skeptical for the current quarter and leaves its sales expectations in a wide range of 26 to 28.5 billion dollars. This means that another decline has been priced in.
Number of users is growing
In the third quarter of 2021, Meta generated almost $28.3 billion. In addition to the fierce competition from TikTok, Meta is struggling with Apple’s data protection rules. The new operating system for Apple’s iPhone makes it difficult to personalize ads. Because this makes them less effective, advertisers pay less. However, the number of daily active Facebook users increased by three percent to 1.97 billion at the end of June. A total of 2.88 billion users access one of the meta services every day.
Meta’s earnings fell 36 percent from April to June to $6.69 billion. This is also related to the higher costs. With around 83,500 employees, Meta currently has around a third more than a year ago. Meta now wants to keep a closer eye on costs and has again confirmed that it will be more restrictive when it comes to new hires and more cautious when it comes to investments. Overall, the company now wants to spend company-wide this year 85 to 88 billion dollars instead of 87 to 92 billion. In the future, Susan Li, the former deputy chief financial officer, will monitor spending. David Wehner, who has been chief financial officer for many years, will take on the newly created role of chief strategy officer.