Meta Reports First-Ever Revenue Drop



Meta’s share price rose more than 6% in trading Wednesday—but it dropped 4% after-hours once the company reported its first-ever fall in revenue. Facebook’s parent company reported quarterly revenue of $28.9 billion, below Wall Street’s expectations and down almost 1% from the equivalent quarter last year, the Wall Street Journal reports. The company’s user growth numbers were mixed, per Reuters. Monthly active users on Facebook were below analysts’ expectations, at 2.93 billion, but the number of daily active users in the second quarter of this year rose slightly to 1.97 billion. Analysts had expected a drop in daily user numbers.

Meta is struggling to deal with factors like inflation as well as rising competition from TikTok, the Journal notes. Ad sales make up almost all of the company’s revenue, and a drop in digital advertising spending has hit the bottom lines of Facebook and rivals including Snap and Alphabet, Google’s parent company. The strong US dollar has also hit revenue because sales in foreign currencies amount to less in dollars, Reuters notes. In a statement, David Wehner, Meta’s chief financial officer, said the company’s third quarter outlook is below analysts’ expectation due to weak advertising demand, which the company “believes is being driven by broader macroeconomic uncertainty.”

Raj Shah at digital consultancy Publicis Sapient tells the AP that the company’s performance was also affected by “questions about Meta’s leadership,” including the exit of COO Sheryl Sandberg. He predicts that the company will continue to have problems during its long and expensive transition toward CEO Mark Zuckerberg’s vision of a virtual reality “metaverse,” which inspired its name change from Facebook last year. “Expect Meta’s decline to continue until Meta can monetize the metaverse, and begin another Meta-reverse,” Shah says. (Zuckerberg was reportedly “visibly frustrated” during a recent Meta all-hands meeting.)

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