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Meta reassured the markets by not losing users in the first three months of the year. But the time is far from being euphoric on the side of Menlo Park…
© Getty — Justin Sullivan
Meta is doing a little better, but the future still looks uncertain for Facebook’s parent company. The Californian group reassured the markets by not losing users in the first three months of the year. But the time is far from the euphoria on the side of Menlo Park, insofar as its net profit fell by 21% compared to the same period last year, to 7.5 billion dollars. The profits of the American firm had already fallen by 8% in the previous quarter.
Although up 7% over one year, Meta’s turnover, which stood at 27.9 billion dollars in the first quarter, is also worrying. It was the social media giant’s weakest revenue jump since its debut on Wall Street in 2012. Still, Meta’s stock soared 12% in electronic trading after the stock market closed in New York.
A reaction from investors that contrasts with that observed three months ago, when the group revealed that Facebook had lost users for the first time in its history. The market sanction had been brutal, with a 25% collapse of its action in a few hours, causing the American giant to lose more than 200 billion dollars in market capitalization.
Dark clouds on the horizon
In addition to the setbacks caused by scandals surrounding its data processing and its anti-competitive practices, the American group must face an uncertain economic climate, due to the blocking of Facebook and Instagram in Russia in the midst of the war in Ukraine, and competition from TikTok, which continues to nibble market share from Facebook among 12-25 year olds, the Chinese application’s favorite target.
In addition, pressure from regulators is mounting, with an antitrust lawsuit in the United States looming, and the entry into force in 2023 in Europe of the Digital Services Act (DSA) and the Digital Markets Act ( DMA) to better regulate the practices of Gafam. The icing on the cake, Apple’s anti-tracking system will cost Facebook $12.8 billion in 2022, according to Lotame. However, the economic model of the American group is based almost exclusively on advertising revenues ($115 billion in 2021)…
At the end of the first quarter, Meta claims 3.64 billion monthly users worldwide for all of its platforms (Facebook, Instagram, Messenger, WhatsApp). Regarding Facebook alone, the American social network now has 1.96 billion daily users, compared to 1.93 at the end of December 2021. The platform can count on the Asia-Pacific zone to compensate for the drop in the number of users in Europe, in particular due to its ban in Russia.
Be that as it may, it is above all on the metaverse that Meta is betting to revive itself. And although the construction of this virtual parallel world requires colossal investments, it is the price to pay to afford a brighter future. In the meantime, the American firm is counting on a turnover of between 28 and 30 billion dollars for the second quarter of 2022.