The metaverse seems to have brought good results to Facebook. Meta, the technology company’s parent company, reported this Wednesday net profits in 2021 of 117,929 million dollars, an increase of 37% compared to 2020. The profits, the first since Mark Zuckerberg announced his commitment to the digital world, they have been driven by advertising sales, which last year topped $114 billion. But it’s not all good news for the tech giant. The start of 2022, the executives have advanced, does not seem so promising. This warning has caused a pronounced drop of 22% of the titles before the brake of new users and a decrease in the time they spend in their applications.
Meta has reported that it has increased its users by 8% in one year in its entire family of applications, Facebook, Instagram, WhatsApp and Messenger. These are used, on average, by 2.8 billion people daily. Growth of this base, however, has slowed year-over-year in the United States and Canada, two of the biggest markets for Facebook’s ad revenue. This, along with inflation, the worst the United States has suffered in decades, and supply chain problems will weigh on the company’s advertising revenue as various industries have tightened their ad spending budgets.
Company executives have also shown caution for the current quarter in the face of what they see as “competition for people’s time.” This means that there are many other applications, TikTok, for example, that have managed to attract more users than Menlo Park. Facebook also acknowledges that it has a harder time monetizing Reels, the video stories launched to rival the Chinese app, than wall posts or Instagram stories.
This has provoked an adverse reaction on Wall Street, which came when the operations had already concluded the day. If the collapse of the share price continues on Thursday morning with the opening of the Stock Exchange, the company could lose 175,000 million dollars of its capitalization.
The company has also recognized as a challenge the privacy regulations imposed by Apple at the end of last April with which users can request not to collect their information to be used for advertising purposes. Specialists estimated that Zuckerberg’s technology would enter 30,150 million dollars in the current quarter, but everything seems to indicate that the figure will be in the range between 27,000 and 29,000 million, which would continue to represent an increase in profits compared to the same period of 2021.
Meta had a great 2021 with revenues of 117,929 million dollars, much higher than the 85,965 billed a year earlier. Last quarter, however, the company posted gross revenue of $10.285 million, slightly less than the $10.9 billion forecast by analysts. The amount translates into a loss of 8% compared to the same period in 2020.
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“I am encouraged by the progress we made last year in several growth areas such as Reels, Commerce and Virtual Reality. We will continue to invest in those priorities in 2022 as we continue to build the metaverse,” Zuckerberg said in a statement to investors, calling the quarter’s results “solid.” In October, the founder of Facebook promised an investment of several billion dollars to consolidate a virtual space that integrates social life with business.
The most recent earnings report integrates for the first time the category of Reality Labs, the laboratories in charge of developing the technology that will be used in this digital dimension. This area has represented a loss of 10,193 million dollars for Meta, 3,304 million in the last quarter, which means that the amount of investment in one of the priorities for Facebook is growing.
Other companies in the sector were also losing ground in their shares after the markets closed, including Twitter, Pinterest and Spotify, which has also reported earnings that disappointed its investors. Alphabet, the parent of Google and a competitor of Facebook, on the other hand, gained 7.5% in its shares after reporting record income on Tuesday.
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