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Meta and Facebook logos: The metaverse as a grand and long-term vision
Photo: IMAGO/STR / IMAGO/NurPhoto
After a slump at the end of 2021, Mark Zuckerberg's Meta group can look forward to increasing user numbers on Facebook again.
In the first quarter of 2022, 1.96 billion users accessed the social network every day - around 30 million more than three months earlier.
The relief for investors was great: the Meta share increased by more than 18 percent in after-hours trading.
In the fourth quarter of last year, the number of daily Facebook users fell for the first time, by a million to 1.929 billion.
Despite the slight decline, this was interpreted as an alarm signal, with the share losing a quarter of its value in one day.
Among other things, Meta cited the increased competition from the short video app TikTok as a key reason for the disappointing numbers.
On Wednesday, Meta's founder and boss Zuckerberg emphatically emphasized the success of the in-house TikTok copy Reels.
On Meta's Instagram app, for example, users watched Reels videos a fifth of the time, he said in a conference call with analysts.
Facebook said about half of all usage time is related to video - and the reels segment is also seeing growth there.
However, Meta is still working on an advertising format to earn money with reels.
Zuckerberg relies on the metaverse
But no matter how well short and long videos are, Meta's biggest vision is going in a different, more interactive direction.
At the end of last year, Mark Zuckerberg announced that his company's long-term focus would be on building a digital parallel world, the so-called Metaverse.
He therefore also changed the group name from Facebook to Meta.
On Wednesday, Zuckerberg stressed that existing services like Facebook and Instagram would have to make enough money to fund the development of the new platform.
The Reality Labs division at Meta takes care of their development, which also includes the group's business with virtual reality glasses such as the Quest 2.
Largely thanks to this device, Reality Labs made $695 million in revenue last quarter.
Due to the high development costs for the metaverse, however, they also recorded an operating loss of 2.96 billion dollars.
All in all, things are no longer running as smoothly for the group as they used to.
Revenue grew in the first quarter year-on-year by just 7 percent to $27.9 billion.
That's a very low increase for the group - and Meta missed analysts' expectations.
The bottom line is that profits fell by a good fifth to $7.465 billion.
The Ukraine war also has consequences for Meta
For the current quarter, Meta announced sales of between 28 and 30 billion dollars.
With a previous year's value of 29 billion dollars, there could even be a drop in sales.
Among other things, the group refers to the weakening of its business as a result of the Russian war of aggression against Ukraine.
This is not only due to the stoppage of the advertising platform in Russia, it was said, but also because concerns about the economic consequences of the war are slowing down the activity of advertising customers overall.
Russian authorities had enforced a blockade of Facebook and Instagram because of “extremist activities” in the country.
They pointed out that Meta tolerates calls for violence against Russian occupying forces in Ukraine.
Technically, Russians can circumvent the block with tools such as VPN tunnels.
Nevertheless, Meta expects that the number of monthly active users in Europe will decrease in the current quarter due to the loss of many users in Russia.
CFO Dave Wehner said that might also lead to a decline in the number of users worldwide.
At least one app from the meta group – including WhatsApp, for example – was used by 2.87 billion users every day.
In the last three months of 2021, it had been 2.82 billion people.
mbo/dpa
