Meta reported a deepening slowdown and warned that fourth-quarter revenues could come in lower than expected, as Big Tech groups continue to face a reckoning from a brutal digital advertising slump and tough macroeconomic conditions.
Shares in Meta dropped more than 12 per cent after the world’s largest social media platform said that it expected its current-quarter revenue to be in the range of $30bn to $32.5bn, compared with analyst expectations of $32.2bn.
The social media group’s revenues in the third quarter fell 4 per cent, to $27.71bn, after a 1 per cent decline last quarter. This was just above analyst estimates of a 5 per cent drop to $27.4bn. Net income fell 52 per cent from a year ago to $4.4bn, below consensus estimates for $5bn, according to S&P Capital IQ.
Meta is the latest Big Tech group to post lacklustre results and an even bleaker outlook, as a wider economic slowdown and soaring inflation continue to batter businesses that rely on advertising, with brands tightening their belts and slashing marketing spend.
“While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth,” said Mark Zuckerberg, Meta’s founder and chief executive.
He said Meta was “approaching 2023 with a focus on prioritisation and efficiency that will help us navigate the current environment and emerge an even stronger company”.
Meta has also faced particular scrutiny for expanding headcount rapidly during coronavirus pandemic boom times and pouring investment into Zuckerberg’s vision of building a digital avatar-filled world known as the metaverse, alongside other virtual and augmented reality projects that are not expected to bear fruit for many years.
The group has also faced rising competition from popular short-form video app TikTok, which is owned by China’s ByteDance.
In late September, Meta announced internally that it was implementing a hiring freeze “for most roles across the company” and would “minimise costs”, according to a memo seen by the Financial Times.
