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Meta Platforms suffered the first drop in revenue in its history in 2022

2023-02-01T21:29:48.062Z


The company that owns Facebook, Instagram and WhatsApp announces a $40 billion share buyback plan The first Facebook accounts (later renamed Meta Platforms) listed with the United States Securities and Exchange Commission (SEC) date back to 2008. That year, Facebook was still a fledgling social network that had a turnover of $272 million (242 million euros at the current exchange rate). For a decade and a half it had a meteoric rise that led the company to expand its business, take over Instag


The first Facebook accounts (later renamed Meta Platforms) listed with the United States Securities and Exchange Commission (SEC) date back to 2008. That year, Facebook was still a fledgling social network that had a turnover of $272 million (242 million euros at the current exchange rate).

For a decade and a half it had a meteoric rise that led the company to expand its business, take over Instagram and WhatsApp, and set a record of 117,929 million dollars in 2021. That exponential growth was cut short last year, the first financial year in which the company has seen its turnover fall, according to the results it has published this Wednesday.

The group founded and directed by Mark Zuckerberg closed 2022 with total income of 116,609 million dollars, 1% less than the previous year.

The bad results of the second and third quarters, with year-on-year falls, already pointed to this, but in the accumulated nine months, Meta still exceeded the turnover of the previous year.

However, the 4% drop in the fourth quarter has put a negative sign on its annual turnover for the first time.

Meta announced last November the dismissal of 11,000 workers, 3% of its workforce, the largest workforce reduction in its history.

The company has suffered from the deterioration of the digital advertising market, but also from the currency impact (due to the strength of the dollar) and the stricter privacy rules imposed by Apple, which block advertising tracking and hinder its business.

Added to this is the competition from TikTok, the social network that has triumphed among young people despite its controversial aspects.

As the company has also embarked on heavy investments in the metaverse that have not worked out so far, the benefits have also suffered.

Thus, Meta's traditional business (which includes Facebook, Instagram and WhatsApp) has lost steam and its operating result suffers.

But the new businesses, grouped in the Reality Labs division and which the company sees as essential for the next generation of social networks, have had operating losses of 4,279 million dollars in the fourth quarter and 13,717 million in the accumulated year.

With all this, the profit of Facebook has also fallen sharply, from the record of 39,370 million dollars in 2021 to 23,200 last year, a drop of 41%.

It is not the first drop in profits in the company's history, but it is the biggest.

Profits were already reduced in 2019 by 16%, but by then the turnover of the social network continued to grow.

Meta shares have lost more than half their value in the past 12 months.

The company faces an existential crisis in which Facebook has ceased to be an almost unlimited manna, while the metaverse has not quite taken off.

Instagram, at the same time, tries to evolve to compete with TikTok.

To encourage the price, the company has announced that it is extending its share repurchase plan by 40,000 million dollars, a form of shareholder remuneration.

In announcing the layoffs, Zuckerberg acknowledged strategy errors by assuming that business growth would continue at the pace reached during the pandemic, when big tech revenues skyrocketed: “At the start of the covid, the increase in E-commerce led to outsized revenue growth.

Many people predicted that this permanent acceleration would continue even after the pandemic ended.

I did too, so I made the decision to significantly increase our investments.

Unfortunately, this did not go as expected.

Not only is e-commerce virtually back to pre-pandemic levels, but “the macroeconomic recession,

the increase in competition and the fall in ads” have ended up causing the first annual drop in the company's billing.

"I was wrong and I take responsibility for it," he admitted then.

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Source: elparis

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