Meta’s growth comes to screeching halt as company projects first revenue drop

theguardian.com:

For the first time in nearly a decade, Meta’s explosive growth has come to a halt, as the Facebook parent company forecast its first decline in revenue since it went public.

Meta, in its second-quarter earnings report on Wednesday, said it expects third-quarter revenue of between $26bn and $28.5bn – lower than the $30.52bn analysts predicted.

The disappointing results come as the company faces a generally weak ad market and pushes a complete overhaul of its brand, pivoting from its core social media product to offerings in virtual reality in 2021. It also follows difficult earnings from other tech firms including Snap, Twitter and Netflix, as fears of a recession grow.

“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” chief executive officer Mark Zuckerberg said on a call with investors on Wednesday. “The situation seems worse than it did a quarter ago.”

For the second quarter ending 30 June, Meta said total revenue, the bulk of which comes from ads, fell to $28.82bn from $29.08bn a year earlier. Meta shares fell nearly 5% in after hours trading following the rare backslide.

Meta’s earnings further underscored an inflation-induced slowdown in the digital ad industry, which has been booming for decades as companies tapped the power of the internet to reach consumers. Tech firms are also struggling to maintain booming growth seen during the pandemic, which bolstered online activity as more people quarantined at home.

In addition to the broader economic downturn, Meta faces a string of uniquechallenges to its business, including stiff competition from TikTok and Amazon for ads and a revenue hit from Apple’s privacy changes to its mobile operating system iOS.

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