Meta has, for the first time in its history, recorded a loss of turnover. This troubling trend for social networks is set to last for a long time.
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 its second quarter 2022 results on July 27 and said its revenue for the period of $ 28.8 billion was down 1% from 2021.
Mark Zuckerberg’s company is going through an extremely difficult period in the context of a global recession and as Frances Haugen’s revelations on the Facebook Files in late 2021 have once again dealt a serious blow to its reputation. But the worst could still come for Meta.
Losses of billions
Meta’s revenue isn’t the only red indicator: the company also recorded a 36% drop in net profit, to $ 6.7 billion. The “Reality Labs” section, which produces the group’s virtual reality headsets and is responsible for the development of the metaverse, also reported a loss of $ 2.8 billion during this quarter.
These poor results were expected. ” They reflect the weak advertising demand we saw during the second quarter “Said the group’s chief financial officer in the press release. ” We also expect Reality Labs results to be even weaker in the next quarter. “, It is specified.
The extent of Meta’s losses and the gloomy prospects for its future are two very worrying factors for the group. The CFO even announced that in anticipation of a ” difficult economic environment “, The recruitment within Meta had been reduced. The only good news that the group can keep from this quarter remains the increase in the number of users of its services. While Facebook announced in February that it had lost some of its users, the trend appears to have reversed: Facebook’s number of daily users increased by 3%, to 1.97 billion.
Probably the hardest part is yet to come
But this good news will probably not be enough to save the group, which faces several challenges. The first concerns its revenues, hard hit by the transparency mechanism of the app tracking put in place by Apple, which allows iPhone owners to limit the tracking of applications and, therefore, the advertising tracking of advertisers. The Verge estimates that the social network has lost 10 billion due to this measure.
Another black spot: the metaverse, on which most of Mark Zuckerberg’s ambitions now rest, is not ready. In addition to Reality Labs racking up losses, the group calculated that the section would not be profitable until at least the end of the decade. It is therefore necessary to predict long-term losses before Meta can hope to see profits, if ever there are any.
Finally, the big threat on Facebook and Instagram comes from TikTok, which is eating more and more market share from younger users. In response, Meta decided to make Instagram a network increasingly focused on videos and advice, trying to invent its own algorithm to compete with TikTok. Only that the measure divides, and some of the biggest stars of the social network, Kim Kardashian and Kylie Jenner, have openly criticized it.
To meet all these challenges, Mark Zuckerberg has not yet presented a new business plan or announced a major reorientation. Instead, he kindly invited his less motivated employees to resign, because ” there are probably a lot of people in the industry who shouldn’t be here “, As he announced during a meeting. I’m not sure if putting more pressure on Meta employees’ shoulders is the best answer to all these problems, but at least things are clear.