Meta, the parent company of Facebook and Instagram, continued its free fall in 2022. The company had more than $65 billion wiped off its market value after it reported another quarter of declining revenues.
Profits at Meta more than halved in the third quarter — the first time in almost a decade that the company’s profits have fallen for four consecutive quarters. It said revenues could drop to as low as $30 billion in the fourth quarter.
In its third-quarter report on Wednesday, Meta reported $27.7 billion in revenue for the third quarter as sales shrank by four percent compared with the same period a year earlier. The company reported a $4.4 billion profit for the same period, 52 percent lower than the $9.2 billion it made a year earlier.
Net income fell to $4.40 billion, or $1.64 per share, from $9.19 billion, or $3.22 per share, a year earlier.
Meta’s shares have fallen by almost two-thirds this year amid heightened concern about the company’s prospects. The disappointing outlook for Meta comes as the company contends with a broad slowdown in online advertising spending amid the global economic downturn, increased competition from TikTok, and challenges from Apple’s iOS privacy update that undercut its primary advertising model.
The company’s heavy investment in the metaverse has also raised concerns among analysts and investors. Reality Labs, its metaverse division, made a $3.7 billion loss over the past three months, and there is no end in immediate sight.
In its third-quarter report, Meta said it anticipated that “Reality Labs operating losses in 2023 will grow significantly year-over-year.”
However, toward the end of Meta’s earnings call on Wednesday, Meta’s CEO Mark Zuckerberg said he was confident that the company’s spending on the metaverse would pay off.
“Look, I get that a lot of people might disagree with this investment, but from what I can tell, I think this is going to be a very important thing,” he says. “People will look back a decade from now and talk about the importance of the work being done here.”
“Over time, these are going to end up being very important investments for the future of our business,” Zuckerberg adds.
The 19 percent tumble in Meta’s share price slashed a further $10 billion off the personal wealth of the company’s CEO. Zuckerberg, who is Meta’s largest shareholder and who has most of his fortune in the company’s shares, had already seen his net worth plummet by at least $70 billion by September this year.
In July, it was reported that Zuckerberg had told Meta employees that the company is experiencing “one of the worst downturns [it has seen] in recent history.”
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