Connect with us

Tech

Meta Shares fall 17% as fourth Quarter Profit is Cut in Half

Published

on

Meta Shares fall 17% as fourth Quarter Profit is Cut in Half

(CTN News) – In response to the economic slowdown affecting its primary internet advertising business, Meta reported the second quarterly revenue loss since going public and issued a warning that it is implementing “major adjustments” to reduce expenses before 2023.

Meta (FB) reported sales of $27.7 billion for the three months ending in September, which was slightly above Wall Street analysts’ predictions but down 4% from last year.

During the June quarter, the parent company of Facebook reported its first-ever quarterly revenue decrease.

The corporation recorded a net income of about $4.4 billion, which was below analysts’ expectations and less than half of what it had earned during the same time last year.

The founder and CEO of Meta, Mark Zuckerberg, said, “We’re entering 2023 with a focus on prioritization and efficiency that will enable us to manage the present situation and emerge an even stronger firm.

Following the news, Meta’s shares decreased by over 17% in after-hours trade on Wednesday.

Due to growing prices and worries about an impending recession, demand for internet advertising has decreased recently.

Ad sales have taken a knock at tech businesses like Google and Snap. On a conference call with analysts after the release, Meta CFO David Wehner said that the average price per ad across all of Meta’s platforms decreased by 18% during the quarter.

At the same time, TikTok and other competitors are increasing competition, slowing Meta’s user growth.

After the quarter, Meta recorded 2.96 billion monthly active users on its primary Facebook app, an increase of 2% over the previous year.

This decreased from the 6% growth rate in the prior quarter. The number of daily active users across Meta’s family of applications increased by 4% to 2.93 billion, a decrease from the 11% growth it saw in the previous year.

During the call, Zuckerberg said that WhatsApp and Instagram have more than 2 billion daily and monthly active users, respectively.

These obstacles to Meta’s core business emerge as it invests billions of dollars in an ambitious new wager to create the metaverse, a future version of the internet that will probably not be developed for many years.

Wehner predicted operational losses from the company’s plans for the metaverse, which fall under its Reality Labs division, would “increase dramatically year over year” in 2023.

Reality Labs cost the corporation $9.4 billion in losses through the third quarter of this year, losing close to $3.7 billion. The Reality Labs division’s revenue decreased by about 50% in September.

The corporation was urged to cut staff costs by at least 20%, yearly capital expenditures by at least $5 billion, and the amount invested in the metaverse to no more than $5 billion per year in an open letter last week from Altimeter Capital, a shareholder in Meta.

Wehner said that the corporation is “making major adjustments across the board to operate more effectively” in the report released on Wednesday.

According to business executives, headcount is expected to be nearly equal to or slightly lower than the 87,314 recorded as of September (an increase of 28% from the previous year).

According to Wehner, we are maintaining certain teams’ headcounts, reducing others, and only investing in headcount growth for our top goals. He also suggested that the business may reduce the size of its actual office space.

On the conference call, Zuckerberg said that the company’s three main investment areas for the next year are its AI discovery engine, which powers Reels and other recommendation services, advertisements and business communications, and its long-term metaverse vision.

The Meta Quest Pro, the company’s newest virtual reality headset, was revealed earlier this month, and Meta praised its potential for corporate users.

Meta anticipates generating between $30 billion and $32.5 billion quarterly sales in the last three months. On the high end, the prediction would represent a fall of 3.5% from last year.

Related CTN News:

Oil Prices Fell in Early Trade in U.S. Crude Oil Stocks, Stronger Dollar

Continue Reading

Recent News

Volunteering at Soi Dog

Learn Spanish Now

Learn Spanish


Buy FIFA Coins

cheap fifa coins