Meta reports a 21% drop in profits.
Mark Zuckerberg, the founder of Facebook, has put his company’s future on the line in an immersive online world known as a metaverse. On Wednesday, the company showed it was still navigating that transformation.
Meta, the company formerly known as Facebook, declared profit of $ 7.5 billion for the first quarter, down 21% from the previous year. Revenue increased 7% to $ 27.9 billion. Wall Street analysts had forecast profits of $ 7.1 billion on revenues of $ 28.2 billion.
The results followed those of Meta bad financial report for February, when the company also saw falling profits and slowing user growth. The next day, Meta’s stock plummeted 26% and its market value plunged more than $ 230 billion in the company’s largest one-day wipeout ever.
The two quarters were the company’s first consecutive profit losses in over a decade, a sign of the difficulties it is facing as it changes course. Although Meta is spending a lot on metaverse-related products like virtual reality glasses, whether people want to buy such gadgets remains far from certain. At the same time, the company’s leading social networking apps, including Instagram, WhatsApp, and Messenger, face challenges. New user growth has slowed and competition from rivals like TikTok, the Chinese-owned video site, is on the rise.
In a statement on Wednesday, Mr. Zuckerberg said he is sticking to the metaverse plan. “We remain confident in the opportunities and long-term growth our product road map will unlock,” he said.
Meta’s core business of digital advertising has also ended hurt by Apple’s decision to allow iPhone users to disable apps that track their online activities. That change affected Meta’s ability to target ads to people on the iPhone. Google also discussed introducing similar privacy changes for its mobile products, which could further affect Meta’s advertising activity.
In March, Russia banned Facebook and Instagram following the invasion of Ukraine, resulting in the loss of tens of millions of users, analysts said. Previously, Facebook announced that it would begin tagging Russian state-backed media and easing hate speech policies for Ukrainian users.
“Meta is facing Category 5 hurricane headwinds, from engagement to advertising to growth,” said Dan Ives, an analyst at Wedbush Securities. “There is a sense that the company still doesn’t have its arms around all the changes with the iPhone or the loss of users.”