"Given revenues were down at a time when costs have grown significantly, modest user growth and impressions simply isn't going to bail you out." "The worry for Meta is that this pain is likely to continue into 2023 as cost headwinds remain a real challenge and the strong dollar impacts on overseas earnings," said Ben Barringer, equity research analyst at Quilter Cheviot. Meta also posted user growth figures roughly in line with expectations, including a year-over-year increase of monthly active users on flagship app Facebook. He believes Reels is gaining against rival TikTok, he added, with Reels being reshared more than 1 billion times a day. Zuckerberg said plays of Meta's TikTok-like short-video product Reels now number more than 140 billion across Facebook and Instagram each day, up 50% from six months ago, and its revenue run rates are now $3 billion annually. "And I think that those who are patient and invest with us will end up being rewarded." Zuckerberg added that he expected the metaverse work to provide returns over time. Meta executives defended the spending, saying most of the company's expenses were still going toward the core business, including investments in more expensive AI-related servers, infrastructure and data centers. In the meantime, he has had to freeze hiring, shutter projects and reorganize teams to trim costs.Īn analyst on the investor call told Zuckerberg investors were worried that the company had taken on "just too many experimental bets" and asked the chief executive why he believed his gambles would pay off. Meta is carrying out several overhauls of its apps and ads products to keep its core business pumping out profits, while also investing $10 billion a year in a bet on metaverse hardware and software.Ĭhief Executive Mark Zuckerberg has said he expects the metaverse investments to take about a decade to bear fruit. That deepened a revenue decline begun the previous quarter, when the company posted a first-ever revenue drop of 0.9%, although it was less steep than the 5.6% decline Wall Street had expected, according to IBES data from Refinitiv. Revenue fell 4% in the third quarter ended Sept. The disappointing outlook comes as Meta is contending with slowing global economic growth, competition from TikTok, privacy changes from Apple (AAPL.O), concerns about massive spending on the metaverse and the ever-present threat of regulation.Įxecutives announced plans to consolidate offices and said Meta would keep headcount flat through the end of 2023. 2, when the company last issued a dismal forecast. If Meta's after-hours stock rout is matched in Thursday's trading session, it will have been its deepest one-day loss since Feb. The forecast knocked about $67 billion off Meta's stock market value in extended trade, adding to the more than half a trillion dollars in value already lost this year. Oct 26 (Reuters) - Facebook parent Meta Platforms Inc (META.O) on Wednesday forecast a weak holiday quarter and significantly more costs next year, sending shares down nearly 20% as investors voiced skepticism about the company's pricey metaverse bets.
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