:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/OOX2U2XIMFRY7FHYAIYN7UQFHA.jpg "Marketers are spending less due to various economic pressures, leaving Meta and its peers to compete for smaller budgets.")
Bloomberg — The owner of Facebook, Instagram, and WhatsApp, Meta (META) reported second-quarter results that disappointed analyst projections, with the first revenue drop since the Menlo Park-based company went public 10 years ago.
Macroeconomic headwinds with rising interest rates have caused advertisers to reduce advertising budgets at the big tech. Meta’s revenue was $28.8 billion in the second quarter, falling short of the average analyst estimate of $28.9 billion. Guidance for the third quarter also fell short of expectations, which caused the stock to fall more than 6% in late trading.
:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/IQ7IKAIYR3N3ZXKA6O25AMHUY4.jpg "LatAm’s Gen Z Pumps Up Spotify’s Active Users Growth in Q2")
Advertising has been a drag on tech companies. Marketers are spending less due to various economic pressures, leaving Meta and its peers to compete for smaller budgets. Added to this, Apple’s (AAPL) privacy rules have made Facebook and Instagram ads less effective.
When reporting ad revenue by user geography, Meta separates regions by US and Canada; Europe; Asia and Pacific, and “rest of the world”. In the “rest of the world”, where Latin America is included, Q2 revenue per user was $3.2 billion, up 7.4% from Q1.
The general revenue per user in the region where Latin America is included was $3.2 billion, up from $2.3 billion in the previous quarter. Even if the region’s revenue is not as significant, by contrast, Latin America (rest of the world) had 631 million daily active users in the quarter, just over twice as many as Europe (303) and far more than the United States and Canada (197), second only to Asia Pacific (836).
Meanwhile, to compete with China’s ByteDance’s TikTok, social networks have been showing more users short-form videos, a format that advertisers are still getting used to and that is not making as much money from advertisers.
:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/AXOTZYGXVNBJXJDMLNDAWEPZP4.jpg "Casai Lays Off Staff in Brazil, Mexico as It Plans a Merger with Loft’s Nomah")
Every day, 2.88 billion people are using one of Meta’s social networks, down slightly from the average analyst estimate of 2.91 billion.
Californian big tech shares fell as much as 6.3% after closing at $169.58. The stock has lost half its value this year.
Changes
Meta is undergoing a period of immense change, with CEO Mark Zuckerberg trying to rally his staff to work more diligently to retain users, attract young people and prevent migration to the popular TikTok app.
Meta has put more Reels - its short videos inspired by TikTok - on its apps and started paying creators to publish them. The company also made a significant change to the social apps’ algorithms to focus on showing people new types of content from those they don’t follow.
This slowdown in ad spending has hit some competitors harder than others. Alphabet’s Google (GOOGL) has seen an increase in ad sales, especially in search ads, where marketers pay for direct response advertising. But Snap (SNAP) and Twitter (TWTR) struggled to meet sales targets, and Twitter’s revenue fell.
To combat the uncertainty, Facebook has tried to contain costs by scaling back hiring and focusing on priorities, such as developing its short-form video strategy and its algorithmic recommendation engine.
The company is still investing in the Metaverse, the immersive virtual reality world in which Zuckerberg believes we will eventually work, buy and communicate. But spending has slowed; some projects, like a watch that could take pictures, have been shelved.
-- With information by Bloomberg Línea
Read more at Bloomberg.com
