Meta platforms (PURPOSE) it’s not going well. The social media giant, the parent of Facebook, Instagram and WhatsApp, has been sending out alarm bells for months.
It has been dropped from the world’s 10 most valuable companies, and its market capitalization has fallen by about $545 billion this year.
The stock fell nearly 15% in the third quarter to end, causing a $57.5 billion drop in market value from July to September.
Chief executive Mark Zuckerberg, who warned At the end of June, some reports that we were headed for “one of the worst recessions we’ve seen in recent history” indicated that the short-term future of methane was under severe cloud cover and a looming storm.
“Facebook” reduced the number of heads for the first time
In September, during Meta’s traditional weekly Q&A session on September 29, the billionaire told employees that the company was entering a new era marked by lackluster growth.
Meta will cut its workforce for the first time since it was founded in 2004, Zuckerberg told employees. This involves several actions: The firm will freeze hiring, restructure some teams and even cut budgets for teams in growth sectors.
Meta, for example, should not replace departures and will part ways with people who are “not successful,” Zuckerberg told employees.
“I would have hoped that the economy would have stabilized more clearly by now,” Zuckerberg said Bloomberg. “But from what we’ve seen, there isn’t yet, so we want to plan somewhat conservatively.”
Boss added that the Meta will be “slightly smaller” by the end of 2023.
“For the first 18 years of the company, we grew rapidly every year, and then more recently comes it’s the first time it’s flat and slightly down,” added Zuckerberg.
Meta declined to comment. The spokesperson referred to Zuckerberg’s statements in the second quarter.earnings call in July.
“Our plan is to continuously reduce the growth of the number of employees during the next year. Many teams will shrink so we can shift energy to other areas, and I wanted to empower our leaders to make decisions within their teams about where to double down, where to fill attrition, and where to minimize team structure long-term. term initiatives,” Zuckerberg told analysts at the time.
Facebook employed 83,553 people as of June 30, up 32% from 63,404 as of June 30, 2021, according to regulatory filings.
‘Not much light until 2023’
Seeing the company facing serious obstacles, some analysts say Meta seems to have lost its compass.
“So there are a lot of headwinds that they face in the interim,” said Brent Thill at Jefferies. “Obviously, the hiring freeze indicates that things are getting worse, not better. So growth is going to be negative this quarter. It was negative last quarter, and it could be even more extreme as we get into this economic storm.”
“So there really isn’t much light until we get to 2023,” Thill said.
The analyst listed the various challenges faced by Meta.
“So you have a slowdown in advertising, which is the first thing that companies cut during economic turmoil. I think the second component is competition. Obviously, there’s been a crowd on TikTok.”
He continued: “Very few 18- to 25-year-olds are still on Facebook, they stampeded TikTok. So I think you have a competitive problem. You’ve stolen your revenue in the interim, you’ve got huge investments in the metaverse. Your operating margins are going down. and then you have the combined effect of not having any interest in buying the technology right now.”
Recession Threatens Tiktok Competition Ad Revenues
Economic slowdown and probability decline Meta’s bread-and-butter Facebook advertising revenue is threatening the business. But the owner of Instagram and WhatsApp also loses market share I am a competitor.
TikTok, a short video platform, has become a favorite medium for advertisers targeting Gen Z and millennials in recent months.
As for the metaverse, which Zuckerberg sees as the company’s next big thing, the jury is still out on whether it will actually be the next big thing. About $16 billion has been invested in it, but it remains a money pit for now.
Reality Labs, which owns Meta’s metaverse plans, reported a second-quarter operating loss of $2.81 billion. Losses in the first half of the year amounted to 5.8 billion dollars. In all of 2021, Reality Labs lost $10.2 billion.
Leave a Comment