Meta’s decline in revenue is not good for the social network

Meta, for the first time in its history, recorded its turnover losses. This worrying trend for the social network is likely to be sustainable.

It’s a cold shower: for the first time in its history, the results of Meta, the parent company of Facebook, are in the red. The company shared results for the second quarter of 2022 on July 27, and said its revenue for the period of $28.8 billion fell 1% from 2021.

Mark Zuckerberg’s company is going through a very difficult time, in the context of a global recession and while Frances Haugen’s revelations on the occasion of the Facebook Files, at the end of 2021, once yet damaged its reputation. But the worst may be yet to come for Meta.

The news is not good for Mark Zuckerberg. // Source: Wikimedia Commons

Losses in the billions

Meta’s turnover is not the only sign of red: the company also recorded a decrease in its net profit of 36%, to 6.7 billion dollars. The “Reality Labs” section, which makes the group’s virtual reality headsets and manages the development of the metaverse, also recorded a loss of $ 2.8 billion in this quarter.

These negative results are expected. ” They reflect the weak advertising demand we experienced in the second quarter “said the group’s financial director in the press release.” We also expect Reality Labs’ results to be weaker in the next quarter. “, it is specified.

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The only good news for Facebook: the social network has stopped losing users. // Source: Canva

The scale of Meta’s losses and the bleak prospects for its future are two worrying factors for the group. The finance director further announced that in anticipation of a ” difficult economic conditions “, the recruitment within Meta is reduced. The only good news that the group can maintain from this quarter remains the increase in the number of users of its services. While in February, Facebook announced that it lost some of its users, the trend seems to have reversed: the number of daily Facebook users increased by 3%, to 1.97 billion.

The hardest part may be yet to come

But this good news is probably not enough to save the group, which has to face many challenges. The first is about its revenues, hard hit by the App tracking transparency mechanism put in place by Apple, which allows iPhone owners to limit the tracking of applications – and therefore, the tracking of advertising on those announcer The Verge estimates that the social network lost 10 billion due to this measure.

Another dark spot: the metaverse, where a large part of Mark Zuckerberg’s ambitions now rests, is not yet ready. With Reality Labs racking up losses, the group calculates that the section won’t make a profit until the end of the decade. Long-term losses must still be expected before the Meta can hope to see any profits – if any.

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For now, Mark Zuckerberg’s Metaverse ambitions are not paying off for the company. // Source: Canva

Finally, the big threat to Facebook and Instagram comes from TikTok, which is eating more market share from young users. In response, Meta made the decision to make Instagram a more video- and recommendation-centric network, trying to create its own algorithm to compete with TikTok’s. Only, the measure divides, and some of the biggest stars of the social network, Kim Kardashian and Kylie Jenner, openly criticize it.

To meet all these challenges, Mark Zuckerberg has not yet presented a new business plan, nor announced a major reorientation. He, on the other hand, kindly called on his less motivated employees to resign, because ” there might be a bunch of business people who shouldn’t be here “, as he announced during a meeting. Not sure that putting more pressure on the shoulders of Meta employees is the best answer to all these problems – but at least things are clear.

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