Since early February, Meta's share price has halved.
“We're going to have to do more with less resources,” Meta boss Mark Zuckerberg said on Wednesday after the social media giant saw its number drop. quarterly business decline for the first time in its history.
Meta (Facebook, Instagram) revenue fell 1% year on year in the second quarter to $28.8 billion, and its net profit fell 36% to $6.7 billion.
The Californian group is facing competition from other platforms such as TikTok and budget cuts from advertisers due to the poor economic situation.
We will slow down the pace of investments and postpone certain expenses, Mark Zuckerberg mentioned during a conference call with analysts.
“We will reduce staff growth in the coming year.
— Mark Zuckerberg
Meta has nearly 84,000 employees worldwide, 32% more than a year ago.
On Wall Street, the company's stock fell more than 4% in electronic trading after the close of trading, before stabilizing around -2% .
On the audience side, Facebook has approximately 1.97 billion daily active users, up 8 million from last quarter, and 2.934 billion monthly active users, or 2 million less than at the end of March.
As of June 30, 3.65 billion people worldwide visited at least one of the group's four social networks and messengers every month – Facebook, Instagram , WhatsApp and Messenger.
Meta has been watched like milk on fire by the market since the start of the year, when the group first announced that it had lost users on its original social network, Facebook.
Around one million daily active users left the platform during the last three months of 2021 (1.929 billion at the end of December).
Since early February, the stock price has halved and more than $400 billion in market capitalization has gone up in smoke.
I've been covering Meta for years and I've never been so worried about the company's future, noted Insider Intelligence analyst Debra Aho Williamson.
The world's second-largest digital advertising company derives its power from its ability to accurately target hundreds of millions of users, in an environment where they spend time every day , socializing or having fun.
But Meta is losing its grip on its huge audience, the expert found.
Facebook's US user base is barely growing, and while Instagram is helping to move the boat forward, we're starting to see a slowdown among teens and young people adults, she explained.
The photos and videos app was heckled this week, when celebrities Kim Kardashian and Kylie Jenner called on it to go back to Instagram and stop trying to be TikTok, a message widely applauded and relayed by users.
Meta, like Google on YouTube, has indeed copied TikTok's format of short and captivating videos, published by creators and recommended to users thanks to a very efficient algorithm.
Mark Zuckerberg confirmed this orientation. He said that currently around 15% of the content seen by Facebook and Instagram users comes from algorithm recommendations. Those numbers are expected to at least double by the end of the year, he said.
The major platforms are also suffering from the economic situation, which is forcing advertisers to cut their marketing budget.
Apple's data privacy changes have further reduced their leeway when it comes to ad personalization.
Last week, Snap plunged 40% in the wake of disappointing financial performance, despite a notable jump in the number of Snapchat users.
And Google on Tuesday recorded the slowest year-on-year revenue growth rate since the second quarter of 2020, when advertisers abruptly closed the floodgates at the start of the pandemic.
Both companies, like many other technology companies, will substantially slow the pace of hiring.
Last fall, Facebook rebranded itself as Meta to signal a pivot to the Metaverse, a parallel universe accessible in augmented and virtual reality (AR and VR) and touted as the future of the internet.
But as the company is forced to refocus on its fundamentals, its initiatives in the metaverse have lost momentum, noted Debra Williamson.