Facebook parent company Meta has not had an easy time of it since Mark Zuckerberg launched it back in November 2021.
The tech corporation’s metaverse concept has still not taken off, while its long-serving executive Sheryl Sandberg announced she would be leaving in June 2022. The WhatsApp owner has also recently faced criticism from Kylie Jenner and Kim Kardashian over the way it runs Instagram, and has also risked the ire of gamers by hiking the price of its Meta Quest 2 virtual reality headset.
Meta had its first ever fall in sales over the previous financial quarter. Now, the company has announced that profits have halfed once more.
So why is Meta losing out - and how has this bad news affected its stock price? Here’s what you need to know.
Why did Meta earnings fall?
In figures revealed by the technology company on 27 October 2022, Met posted a decrease in profits and sales. Slaes shrank by 4% in the three month period to September, while profits halved.
The tough economic situation was further deepened by the analysis that the latest valuation is set to wipe around $78billion off od the company’s market value. This is likely to happen if the losses hold.
Meta has blamed the poorer performance on companies cutting advertising budgets amid a tough economic situation worldwide. Additionally, the company has seen competition from the likes of TikTok and resistance from external factors such as Apple’s privacy settings on targeted adverts.
It comes after Meta released its financial results for the second quarter of 2022 on Wednesday 27 July. They showed that the company’s overall revenues fell back 1% ($255 million or £210 million) to $28.8bn (£23.7 billion) when comparing the three months to June 2022 with the same period in 2021.
This was the first-ever quarterly sales decline for Meta, formerly known as Facebook. Total revenue is how much money a business generates from all of its activities before expenses, such as salaries, and taxes are taken away.
What’s left after all of these things have been taken away from the overall sales figure is called net profit. This figure determines how much money a company can use to invest in itself and hand out in bonuses, or keep in the bank. These too fell in the quarter - declining 36% to $6.7 billion (£5.5 billion).
In part, these results were caused by a decline in the average price-per-advert, which decreased 14% year-on-year. Meta said it believed this decline had come as a result of the current economic uncertainty around the world.
What did Mark Zuckerberg say about Meta results?
Commenting on the record for the third quarter, Mets founder Mark Zuckerberg, said that the company faced some “near-term challenges”. He also gave clues to the company scaling down to become a “smaller organisation” in the next year, potentially paving the way for job cuts and savings in the company.
He said: “There are a lot of things going on right now in the business and in the world. We’re going to resolve each of these things... I think those who are patient and invest with us will end up being rewarded.”
What is Meta stock price?
As of 27 October 2022 and at the time of writing, Meta stock was trading at $100.03 per share.