Meta Platforms has once again disappointed with its results. The profit of the parent group of Facebook has fallen 52% in the third quarter of 2022, to 4,395 million dollars (a similar figure in euros), after the second quarterly drop in income in its history. The company invoiced 27,714 million dollars in the third quarter, 4% less than in the same period of the previous year, according to the accounts published this Wednesday by the company. The poor evolution of the Meta group and other technology companies is a symptom of the deterioration that the economy is experiencing. In the case of the Facebook group, its commitment to the metaverse and virtual reality, competition from TikTok and Apple’s blocking of advertising tracking also weigh.
Meta’s traditional business (which includes Facebook, Instagram and Whatsapp), among others, has run out of steam and its operating income fell 28% in the quarter, but the fact is that the new businesses, grouped in the Reality Labs division and which the company sees as essential for the next generation of social networks have had operating losses of 3,672 million in the third quarter and 9,438 million in the accumulated of the first nine months of the year.
The worst thing is that the company anticipates that the losses of that division, which still only generates 1% of revenues, “increase significantly” next year. “Beyond 2023, we expect investments in Reality Labs to be made at a pace that allows us to achieve our goal of growing the company’s long-term operating income,” Add your statement. For now, Meta is missing the user goals for Horizon Worlds, its metaverse product. In his traditional business, he is also not getting close to TikTok with his short videos (Reels) on Facebook and Instagram.
In trading after normal market hours, Facebook shares fell 12% after falling 5.6% during the normal session on a day when technology stocks have been punished by the accounts they presented on Tuesday. both Microsoft and the Google group. Meta Platforms has lost almost half a trillion dollars of stock value this year, with a cumulative drop of 62% at the close of trading on Wednesday.
“Although we face short-term challenges, the fundamentals are there to return to higher revenue growth. We approach 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge as an even stronger company.” said the founder and head of the company, Mark Zuckerberg. Facebook maintains a strong user base, with 1.98 billion active daily users, 3% more than in the same period last year.
The company has problems on the expense side, due to these new projects, and on the revenue side. The advertising shows an increase of 17% in the insertions, but a reduction of 18% in the average price, with which in the end the billing goes back. After a history of growth, they suffered their first year-on-year drop in the second quarter, fell again in the third and will fall again in the fourth, for which the company expects them to be between 30,000 and 32,500 million, compared to almost 33,700 in the last year. This can also lead to a setback in the exercise as a whole. In addition, the strength of the dollar also drains your income abroad by converting it into your currency. The company puts the foreign exchange impact at 1,790 million.
The commitment to the metaverse forces the company to tighten its belt in other areas: “We are making significant changes in all areas to operate more efficiently,” says its financial director, Susan Li, in a statement. “We are keeping some teams unchanged in terms of roster, reducing others and investing in roster growth only on our highest priorities. As a result, we expect headcount at the end of 2023 to be roughly in line with Q3 2022 levels,” she adds. At the end of September, Meta had 87,314 employees, 28% more than a year before.
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