Meta Platforms’ fourth-quarter forecast is lower than the analyst’s estimates range. This shows the social media giant continues to struggle with the economic slowdown and weak advertising market.
Meta has projected revenue of $30 billion to $32.5 billion in the last quarter, whereas average analysts’ expectations compiled by Bloomberg is $32 billion. Shares of the social media giant that owns Facebook and Instagram fell 12% in extended trading Wednesday. This year the stock has declined more than 55%.
Most of its revenue comes from advertising. The privacy policy has made social media advertisements less effective. Meta has slowed hiring and focusing on social media and virtual reality products.
With the slump in revenue expected to continue, CEO Mark Zuckerberg said the company is making changes across the organization more efficiently. They are also scrutinizing operating expenses in all areas.
Meta has changed its algorithms this year to counter the TikTok app’s popularity. The platform has introduced short videos Reel to increase user engagement with the content chosen by its algorithms and increase revenue opportunities.
The company changed its name to Meta from Facebook last year as it was betting on the virtual reality metaverse. Zuckerberg feels that virtual reality gatherings will influence the future of all communication and work. The metaverse project has incurred billions of dollars, and the company expects to lose more money next year.
Strong Fundamentals
Meta is forecasting the expenses to be $85 billion to $87 billion this year and $96 billion to $101 billion in 2023. Zuckerberg said that despite short-term challenges, the company has strong fundamentals to grow stronger in the future.
The social media products of Meta Platform remain popular and will generate enough revenue to fund metaverse plans. The number of users per day increased by 4% in the third quarter compared to last year’s same period, with 2.93 billion active users daily. Every month, the active users were 3.71 billion.
Meta is one of many tech companies to face the economic downturn. Google has managed to resist the ad downturn uniquely but, along with YouTube, saw its sales fall short of projections. Snap Inc. reported its slowest sales growth in the last quarter after it spent the year restructuring its business.
Shares of Pinterest and Snap fell after the results of Meta declined.
Meta’s third-quarter revenue was $27.7 billion, more than analysts’ estimate of $27.4 billion. Net income declined 52% to $4.4 billion for the same period as last year, and earnings per share were $1.64, lower than analysts’ estimates of $1.88.
