The descent into hell continues. Revenue drops, net profit halves, users stagnate: Meta (Facebook, Instagram, WhatsApp) is going through a bad patch, but boss Mark Zuckerberg is sticking with Grail: building the metaverse. Despite the indifference of the public and the skepticism of Wall Street.
The California group saw its net profit melt to $4.4 billion in the third quarter (-52% in one year) and its turnover down 4% to $27.7 billion.
Meta stock fell nearly 20% after results were announced in electronic trading after the New York Stock Exchange closed. In just over a year, the company has lost nearly three-quarters of its value. If the stock opened at $104 in the morning, Meta would be worth just $280 billion, a level not seen since 2016.
“increased competition”
Like Google (Alphabet), Meta is suffering from inflation and rising interest rates, which has led many advertisers to cut back on their marketing budgets. “We’re facing an unstable macroeconomic environment, increased competition, issues with ad targeting, and increased costs for our long-term investments, but I have to say our products look better than some of the comments. Don’t suggest that,” calmed Mark Zuckerberg on Wednesday during an analyst conference.
Apple’s new rules, which require apps to ask users’ permission to track them and send them ads, have made things even more difficult on Facebook and Instagram.
Debra Aho Williamson, an analyst at Inside Intelligence, responded that the social media giant is “standing on shaky legs.” The leader’s decision to “focus his work on the future promise of metaverses has diverted his attention from the current harsh reality.”
In all, about 3.71 billion people use at least one of the company’s services (social networking and messaging) each month, up just 1.6% from before the summer.
Huge Metaverse losses
The group has little recourse against the global economic context or its powerful neighbor in the apple, but Mark Zuckerberg has welcomed the advance of “Reels,” a format of short videos copied from the hugely popular TikTok. “More than 140 million reels are turned on. Facebook and Instagram every day, which is 50% more than six months ago.” “And we think we’re gaining market share (on our apps) from competitors like TikTok.”
The subsidiary of Reality Labs, which is responsible for virtual and augmented reality platforms and equipment, expanded its losses from $2.6 billion to $3.7 billion in the third quarter. Nor should it succeed in 2023.
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