Profits more than halved at the owner of Facebook, wiping $2bn off the fortune of founder Mark Zuckerberg as the company became the latest victim of a global slowdown in tech.
Sales of $27.7bn (£23.8bn) were down 4pc on the company’s performance in 2021, while profits of $4.4bn were halved compared to a year ago.
Mr Zuckerberg, Meta’s chief executive, said: “While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth.”
Meta’s share price dropped 5pc in after-hours trading when the results were unveiled, wiping $17bn from the company’s value.
Analysts had expected Meta to post revenues of around $27.3bn and to report around 2.94bn monthly active users across all of its social media services, according to estimates compiled by Refinitiv and StreetAccount.
A broad slowdown in global advertising spending driven by inflation fears was expected to be the main driver of shrinking sales and profits at social media companies, especially Meta’s Facebook and Instagram brands.
The company faces increased competition from China’s TikTok, as well as increasing advertising-related challenges from Apple because of recent changes to the iPhone’s operating system that limit how much valuable data advertisers can extract from users.
Mr Zuckerberg has lost more than half his fortune over the past year, according to Forbes magazine’s calculations, mainly thanks to the decline in Meta’s share price over the past 12 months. It has declined 59pc since Mr Zuckerberg renamed the company.
At market close on Wednesday it was trading at $129, compared with its year-ago price of $315.
Erin Browne, a portfolio manager with US investment behemoth Pimco, told Bloomberg on Wednesday: “What I think tech is highlighting now is that they’re the canary in the coal mine for the broad market.”
Earlier this month Meta accepted a Competition and Markets Authority directive to divest Giphy, an animated images website whose product generates large volumes of valuable data about its users. The $400m buyout would have reduced competition between social media websites, the regulator said.
Advertising spending in the UK was forecast on Wednesday to drop by £500m according to the Advertising Association and the World Advertising Research Council.
James McDonald, at Warc, said market conditions were at their lowest ebb since the Covid-19 outbreak in early 2020.
Meanwhile the boss of Snapchat’s parent company, Evan Spiegel, joined forces with Apple as he trashed Meta’s flagship metaverse – a vision of the future where humanity lives and works in an online world accessed through virtual reality headsets.
“The metaverse is ‘living inside a computer.’ The last thing I want to do when I get home from work during a long day is live inside a computer,” Spiegel told a Wall Street Journal conference.
Apple’s chief marketing officer Greg Joswiak added that the term metaverse is “a word I’ll never use”. Meta made no immediate comment about its metaverse plans on Wednesday.
The metaverse is Zuckerberg’s personal project, having been launched last year to a lukewarm reception worldwide. Facebook itself was renamed Meta Platforms to emphasize the shift in corporate direction.
Software industry stalwart Adobe has enthusiastically jumped on the metaverse bandwagon, believing it opens a new opportunity to sell 3D graphics creation tools to web designers, while other businesses have adopted a wait-and-see stance.
As the tech industry prepares for a harsh winter, one company has enjoyed some recent success. Elon Musk visited Twitter’s corporate HQ on Wednesday and also changed his Twitter account description to read “Chief Twit”. The world’s richest man is widely expected to confirm his $44bn buyout of Twitter ahead of a court-imposed deadline that expires on Friday.
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