The parent company of Facebook and Instagram faced a decrease in earnings for the first time. On Thursday, Meta announced its first-ever drop in revenue, driven by lower ad spending for its users and competition from TikTok.
The company’s problems are partly common to the market. Demand for advertising is declining due to the general economic recession. Alphabet, Google’s parent company, and Snap have also seen the trend. The growth of technology companies has slowed. However, Meta also faces unique challenges.
These include the recent firing of Chief Operating Officer Sheryl Sandberg, who built the company’s massive advertising business and catapulted it to super-unicorn status.
Increasing competition from TikTok, Apple’s privacy changes that barred apps from collecting data without users’ consent, and general negative sentiment about the company also contributed to the decline.
We remind you, Meta is out of ten of the world’s largest companies by market value. After publishing the results for the second quarter, it turned out that the company received 36% less profit than last year. This came as a surprise to analysts, who had expected growth.
“The year-over-year drop in quarterly revenue signifies just how quickly Meta’s business has deteriorated. We had forecasted that Meta’s worldwide ad revenue would increase 12.4% this year to nearly $130 billion. Now, it’s unlikely to reach that figure,” says analyst Insider Intelligence.