Meta posts first-ever drop in sales

Just nine months into its new life as Meta Platforms and the social media giant’s money-losing pivot to the metaverse and augmented reality crashed into economic reality.

Not only has the renowned parent company of Facebook, Instagram, WhatsApp and Reels just delivered its first-ever sales decline, but CEO and founder Mark Zuckerberg has told investors that hopes for a near-term turnaround are unlikely.

“We appear to have entered an economic downturn that will have a broad impact on the digital advertising industry,” Zuckerberg told company analysts. second quarter results call Wednesday (July 27) afternoon.

“It’s always difficult to predict the depth or duration of these cycles, but I would say the situation looks worse than a quarter ago,” the 38-year-old billionaire added just hours after the Federal Reserve approved its fourth rate hike this year as the central bank grapples with its own economic challenges in the form of runaway inflation.

Problem ahead, problem behind

Alongside Meta’s bleak outlook, lower forecast and reported 1% drop in revenue for the three months ending June 30, Zuckerberg also outlined a future that will see less spending, reduced investment, a slowdown in hiring and a reduction in the workforce.

The company-wide reorganization and overhaul comes at a time when Meta’s former $1 trillion market valuation — as well as its founder’s net worth — have both been cut in half over the past few years. Last 11 months with the company focusing on longer-term activities and results aimed at making it stronger when economic conditions improve.

See also: Meta, Apple in competition to conquer the metaverse

“Based on the revenue growth we’re seeing in 2021, we’ve launched a number of multi-year projects to accelerate our business,” Zuckerberg said, “but given the more recent revenue trajectory we’re seeing, we slow down these investments. [down]he added, while noting that other planned spending for the next year or two would now be pushed back even further.

As striking as this strategic slowdown and lightened forecast were, Zuckerberg wasn’t done and continued to tackle Facebook’s other pain point – its highly paid employees – whose ranks rose 30% on the year. last to reach over 83,000.

“Our plan is to steadily reduce headcount growth over the next year,” Zuckerberg said. “Many teams are going to shrink so that we can transfer energy to other areas within the company,” he warned, echoing a policy that has been embraced by most – if not most. all – Meta’s so-called “Big Tech” rivals lately. weeks.

AI and Adios

While many investors and skeptics have derided the social media company for its turbulent transition and rebranding, Meta is still very much aligned with the metaverse, which Zuckerberg called one of two trends the company was following.

“The first wave driving our business today is AI,” he said, “and then the longer-term second wave is the emergence of the metaverse.”

In the former case, and with Meta’s average price per ad down 14% last quarter from a year ago, Facebook and Instagram users can expect to see a lot more curated posts. by computer by strangers populating their feeds in the coming weeks and months versus musings, rants, and “cat pics” uploaded by real friends.

At the same time, the company is trying to balance the needs of advertisers – and some widely followed and influential celebrities – who prefer a little longer to deliver their messages against the growing user demand for shorter videos, such as those on TikTok, YouTube Shorts or its own Reels platform.

In fact, just yesterday, Instagram boss Adam Mosseri went out of his way to refute criticism of the video boost and changes to recommendations, assuring angry users that the photos won’t didn’t disappear, but neither did the video.

“I want to be clear. We will continue to support photos. It’s part of our heritage,” Mosseri said in his video post on Twitter. “Having said that, I have to be honest. I believe more and more Instagram is going to go video over time. We see that [happening] even if we don’t change anything.

Meta also said it sees AI as the solution to the “loss of signal” it and other websites have suffered following changes to iOS location and tracking systems. Apple that make opting out easier for users.

See also: Alphabet’s Pichai says AI will fuel a new wave of growth for Google Search

“Our approach here is to increase first-party understanding of people’s interests by making it easier for them to engage with businesses in our own apps,” Zuckerberg said, “whether through business messaging, shops or new advertising products”.

Another thing changing at Meta is the C-suite, as current CFO David Wehner will assume the new role of Chief Strategic Officer on November 1 and be replaced by VP Finance Susan Li. Meanwhile, Sheryl Sandberg , a longtime chief operating officer, made her final appearance on the earnings call before her recently announced transition to full-time philanthropy in the fall.

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NEW PYMNTS SURVEY FINDS 3 IN 4 CONSUMERS HAVING HIGH DEMAND FOR SUPER APPS

About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.

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