Profits more than halved at the Facebook owner, wiping out $2 billion from founder Mark Zuckerberg’s fortune as the company became the latest victim of a global tech downturn.
Sales of $27.7bn (£23.8bn) were down 4% from the company’s performance in 2021, while profits of $4.4bn were halved compared to a year ago.
Mr. Zuckerberg, CEO of Meta, said: “While we face near-term revenue challenges, the fundamentals are there for a return to stronger revenue growth.”
Meta’s share price fell 5% in after-hours trading when the results were released, wiping out $17 billion of the company’s value.
Analysts had expected Meta to post revenue of around $27.3 billion and report around 2.94 billion monthly active users across its social media services, according to estimates compiled by Refinitiv and StreetAccount.
A general slowdown in global advertising spending due to inflation fears is expected to be the main driver of declining sales and profits for social media companies, especially Meta’s Facebook and Instagram brands.
The company faces increased competition from China’s TikTok, as well as growing advertising challenges from Apple due to recent changes to the iPhone’s operating system that limit the amount of data valuable that advertisers can extract from users.
Mr. Zuckerberg has lost more than half of his fortune in the past year, according to calculations by Forbes magazine, largely thanks to the decline in Meta’s share price over the past 12 months. It has fallen 59% since Mr. Zuckerberg renamed the company.
As of Wednesday’s market close, it was trading at $129, down from $315 a year ago.
Erin Browne, portfolio manager at US investment giant Pimco, told Bloomberg on Wednesday: “What I think technology is highlighting now is that they are the canary in the coal mine for the entire market.”
Earlier this month, Meta accepted a directive from the Competition and Markets Authority to divest Giphy, a moving image website whose product generates large volumes of valuable data about its users. The $400 million buyout would have reduced competition between social media sites, the regulator said.
Advertising spending in the UK is expected to fall by £500m on Wednesday according to the Advertising Association and the World Advertising Research Council.
James McDonald of Warc said market conditions were at their lowest since the Covid-19 outbreak in early 2020.
Meanwhile, Snapchat parent company boss Evan Spiegel has teamed up with Apple as it tears down Meta’s flagship metaverse – a vision of the future where humanity lives and works in an accessible online world. through virtual reality headsets.
“The metaverse is ‘living inside a computer.’ The last thing I want to do when I come home from work for a long day is live inside a computer,” Spiegel told a Wall Street Journal conference.
Apple marketing director Greg Joswiak added that the term metaverse is “a word I will never use”. Meta had no immediate comment on its Metaverse plans on Wednesday.
The Metaverse is Zuckerberg’s personal project, which launched last year to mixed reception around the world. Facebook itself was renamed Meta Platforms to highlight the company’s shift in focus.
Software industry stalwart Adobe has jumped on the Metaverse bandwagon enthusiastically, believing it opens up a new opportunity to sell 3D graphics creation tools to web designers, while other companies have taken a stance. wait-and-see.
As the tech industry prepares for a harsh winter, one company has seen some success recently. Elon Musk visited Twitter headquarters on Wednesday and also changed his Twitter account description to read “Chief Twit.” The world’s richest man is expected to confirm his takeover of Twitter for $44 billion before a court-imposed deadline that expires on Friday.