Facebook owner Meta reports first revenue drop due to lower ad sales and competition from TikTok | business news
Facebook owner Meta has reported its first revenue slump due to lower ad sales and growing competition from TikTok.
The social media giant reported revenue of $28.8 billion for the three months ended June, down nearly 1% from $29.08 billion a year earlier.
The number was lower than the $28.9 billion expected by Wall Street Meta Shares fall about 5% in extended trading.
The company, which also owns Instagram and WhatsApp, posted earnings of $6.69 billion, or $2.46 per share, for the quarter — down 36% from the year-ago period, when earnings were $10.39 billion, or $2.46 per share was $3.61 per share.
Meta issued a muted guidance for the next quarter — July through September — with expected sales of between $26 billion and $28.5 billion.
That’s less than the $30.5 billion analysts were expecting.
Meta stock has lost about half of its value since the beginning of the year, reflecting investor concerns about the advertising business.
Apple’s iOS privacy update last year limited Meta’s ability to track and target users, while rising inflation prompted some companies to cut advertising budgets.
Meta’s competitors Snap and Twitter also reported disappointing results last week, citing similar challenges.
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That metaverse is proving to be a costly endeavor for meta so far. The Reality Labs business unit, which is responsible for developing the metaverse, reported a loss of $2.8 billion in the second quarter, despite revenue of $452 million.
That part of the company is expected to make less money in the next quarter.
Facebook saw a 3% increase in daily active users over the past year, reaching 1.97 billion in June.