Meta records first-ever revenue drop
After reporting its first-ever quarterly revenue decline on Wednesday, Meta Platforms Inc (META.O) gave a pessimistic outlook, with recession worries and competition pressures impacting on its sales of digital ads.
In extended trading, the company’s shares in Menlo Park, California, were down nearly 4.6 per cent.
The business stated that it anticipates third-quarter revenue to decline to $26 billion and $28.5 billion, which would mark the second consecutive decline over the same period last year. According to IBES statistics from Refinitiv, analysts had $30.52 billion on the list of their expectations.
Nearly all of the total revenue—which was $28.8 billion in the second quarter that ended June 30—came from the selling of advertisements. Refinitiv reported that the amount somewhat fell short of Wall Street’s forecast of $28.9 billion.
The business, which runs the biggest social media platform in the world, reported varying levels of user growth.
In the second quarter, monthly active users on the leading social network Facebook increased by 1% year over year to 2.93 billion, falling just short of expert predictions, but daily active users easily outperformed forecasts at 1.97 billion.
The strong dollar is putting some pressure on Meta’s ability to generate income because sales made in other currencies are worth less in dollars. Based on current exchange rates, Meta predicted a headwind to third-quarter revenue growth of 6%.
However, the Meta data also imply that social network and search players’ fortunes in online ad sales may be diverging, with the latter being more severely harmed as ad buyers rein in spending.