Meta stock: share price of Facebook, Instagram and WhatsApp parent company - 2022 fall in earnings explained

The news comes after a bad week for Meta in which it revealed its Meta Quest 2 headset prices are going up, while Kylie Jenner and Kim Kardashian criticised Instagram

<p>Meta has posted its first ever sales drop (image: Getty Images)</p>

Meta has posted its first ever sales drop (image: Getty Images)

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.

Now, its turbulent period has been underscored by its first ever fall in sales over the last financial quarter.

Mark Zuckerberg has said Meta will ‘steadily’ reduce its headcount (image: Getty Images)

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?

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 is the first-ever quarterly sales decline Meta, formerly known as Facebook, has posted.

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).

Mark Zuckerberg is set to lose key lieutenant Sheryl Sandberg later this year (image: Getty Images)

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.

Despite losing out financially, the results also showed more people have been logging into Facebook and Meta’s other social media apps.

The company said an average of 1.97 billion people were logging into Facebook on a daily basis in June, up from 1.96 billion in March.

Meanwhile, an average of 2.88 billion people used at least one of its apps every day in June, up from 2.87 billion in March.

Social media site Twitter also posted a 1% drop in revenues for the second quarter, while Alphabet - the parent company of Google and YouTube - saw revenue growth slow from 62% to 13% over the same period.

What did Mark Zuckerberg say about Meta results?

In a transcript of a call Meta CEO Mark Zuckerberg had with investors on Wednesday, he said the results were a reflection of an “economic downturn” that would have a “broad impact” on advertising.

The billionaire said the drop in Meta’s revenue growth meant it would be “slowing the pace” of some multi-year projects and would be delaying other investments.

Mr Zuckerberg also revealed Meta planned to “steadily reduce headcount growth” over the next year - a move that would lead many of its teams to shrink.

Pointing one way: Mark Zuckerberg says Meta is heading into an economic downturn (image: AFP/Getty Images)

“This is a period that demands more intensity, and I expect us to get more done with fewer resources,” he said.

“We’re currently going through the process of increasing the goals for many of our efforts.

“Previously challenging periods have been transformational for our company and helped us develop our next generation of leaders. I expect this period to be no different.”

The tech boss added that he felt Meta would come out of its downturn “stronger and more disciplined” than it had entered it.

What is Meta stock price?

At the close of US stock markets on Wednesday, Meta stock was trading at $159.15 (£131.20) per share.

This marks a fall of 58% from an annual high of $378.69 recorded in September 2021 and a decline of 13% from $183.18 recorded last week.