For the first time ever, social media giant Facebook has reported a revenue drop in the June quarter, with predictions indicating that the growth in the third quarter could fall even more. The company reported a 1 percent drop in revenue since going public in 2007.
In 2021, Facebook recorded a revenue of $29.07 billion in the second quarter, reaching $28.8 billion this year. The overall profit for Meta, its parent company, fell 36 percent to $6.7 billion. The drop is reportedly bigger than what Wall Street analysts were expecting. However, Facebook managed to grow its daily users by 3 percent to 1.97 billion. Meta says that every day 2.88 billion use its suite of social apps — Facebook, Messenger, Instagram, and WhatsApp.
CEO Mark Zuckerberg has said that the economic downturn has an impact on digital advertising businesses,. “We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” Zuckerberg told investors on a conference call. “I’d say the situation seems worse than it did a quarter ago.”
Zuckerberg further added that Meta would slim down spending and slow its pace of hiring to weather the storm. “This is a period that demands more intensity, and I expect us to get more done with fewer resources,” he said.
At the same time, Meta is focusing more on short video content due to the growing competition from rival TikTok. On a call with analysts, Zuckerberg stated that the AI algorithm recommends over 15% of a typical Instagram user’s feed from people, groups, or accounts that the user does not follow. He further added that the company expects that number to “more than double” by the end of 2023.