Facebook reports a loss in revenue for the first time in ten years. The social network says that in the second quarter, sales fell for the first time ever, by 1% to $28.8 billion, and it expects growth to slow even more in the third quarter.
The profit of Meta’s parent company fell by 36%, to $6.7 billion. In the first three months of the year, Zuckerberg’s company, metaverse Reality Labs, lost $2.8 billion.
On Wall Street, people expected the first-ever loss in revenue growth of Facebook. But it shows how quickly Meta’s business has become more difficult on all fronts. Last year, Meta lost $10 billion in advertising revenue because of Apple’s “Ask app not to track” prompt. Due to the current economic downturn, advertisers have started to cut back on how much they spend.
Meta is changing Facebook and Instagram so that it focuses on short videos and posts that its system recommends to users. In a call with analysts, Zuckerberg said that next year, the number of content people see on Facebook and Instagram from accounts they don’t follow will be more than double what it is now. He says that it will cost a lot to build the AI that will make it possible.
A few months ago, Meta saw a drop in the number of people who used Facebook every day. However, it was able to change that by increasing the number of people who use Facebook every day by 3 percent, to 1.97 billion. Just 2.88 billion people used Meta’s social media apps every day a year ago. Now, the same number of people use Facebook, Messenger, Instagram, and WhatsApp every day.
“MORE ENERGY IS NEEDED” during this time
Zuckerberg says that Facebook’s “engagement trends” have been “stronger than we expected.” This is mostly because more people are watching videos. “Reels” is making more money for the company than “Stories,” which is a short-form video format for TikTok that the company copied from Snapchat a few years ago. For now, the company is focusing on Reels, even though they aren’t making a lot of money from them. However, in the long run, the company expects Reels to bring in money.
During the call about the results, Zuckerberg said, “This is a time when more work is needed, and I want us to do more with less.” He said the same things about cutting costs that he had said to the staff. “I think that we will come out of this time as a more organized and stronger group.”