Meta Suffers First-Ever Earnings Decline In Its History

For the first time ever in its history, Meta Platforms projected a not-so-sunny forecast after reporting a year-over-year decline in revenue, with blame being placed on inflation fears dampening digital advertising sales. 

According to Reuters, the technology giant said it expected its third-quarter earnings to fall even further to between US$26 billion and US$28.5 billion, instead of analysts’ estimated US$30.52 billion, which would signal the company’s second year-over-year drop. 

For the second quarter of this year, which ended on June 30, Meta’s digital advertising sales—which make up nearly all of its total revenue—fell by 1% to US$28.8 billion, down from the US$29.1 billion figure last year. 

“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” Meta Head Mark Zuckerberg was recorded as saying in a conference call. 

“And it’s always hard to predict how deep or how long these cycles will be. But I’d say that the situation seems worse than it did a quarter ago.” Uh oh. 

To combat the declining figures, Zuckerberg said the firm will “steadily reduce headcount growth over the next year,” with hopes of getting more done “with fewer resources,” though no specifics were given. 

Could the weight of TikTok finally be weighing on Meta’s bottom line? Or will Instagram’s pivot to Reels and Meta’s investment in the metaverse help bring it back to its glory days? We’ll have to wait and see. 

[via Reuters and MarketWatch, cover image via Inkdropcreative1 | Dreamstime.com]