Meta gives tepid revenue forecast as ad weakness persists
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Meta gives tepid revenue forecast as ad weakness persists

Meta gives tepid revenue forecast as ad weakness persists

In the third quarter, Meta posted revenue of $27.7bn, slightly beating analysts’ average estimate for $27.4bn

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Meta Platforms gave a forecast for revenue in the fourth quarter that was on the low end of analysts’ estimates, showing the social-media platform continues to struggle with a weak advertising market amid an economic slowdown.

The owner of Instagram and Facebook said it sees $30bn to $32.5bn in revenue in the last three months of the year. Analysts had been expecting $32.2bn, according to estimates compiled by Bloomberg. The shares tumbled more than 12 per cent in extended trading and are down more than 55 per cent this year through Wednesday’s close.

Meta, which makes most of its revenue from advertising, is grappling with a decline in marketers’ budgets due to economic uncertainty and a recent change in Apple’s privacy rules that made social media ads less effective. The company has cut costs by slowing hiring and narrowing its priorities to focus on keeping its social media platforms relevant and expanding its virtual reality offerings.

This year, Meta has transformed a number of key parts of its business. As ByteDance Ltd.’s popular TikTok app has won users’ time and accustomed them to an interests-based feed of vertical videos, Meta has changed Facebook and Instagram’s experiences to show more algorithmically-chosen content and less from the people you follow. Its short-form videos, called Reels, are meant to increase user engagement and revenue opportunities on the app.

The company, which changed its name from Facebook to Meta a year ago, is also betting big on the metaverse, virtual-reality-fueled gathering places that chief executive officer Mark Zuckerberg thinks will host the future of work and communication. The effort is losing Meta billions.

Meta’s legacy social media products need to remain popular enough to generate the advertising revenue that will fund the metaverse vision. In the third quarter, 4 per cent more people spent time on Meta’s platforms every day, compared with the same period last year, with 2.93 billion daily active users. Monthly, the tech giant saw 3.71 billion active users.

In the third quarter, Meta posted revenue of $27.7bn, slightly beating analysts’ average estimate for $27.4bn. Net income fell 52 per cent from the same quarter last year to $4.4bn. Earnings per share were $1.64 below the $1.88 per share average estimate.

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