Facebook parent Meta reports weakest revenue growth in a decade as ad sales suffer | business news

Facebook’s parent company has reported its weakest revenue growth in a decade but has seen a partial rebound in its share price after what has been a torrid 2021 for the company.

meta platforms posted sales of $27.9 billion between January and March — slightly below Wall Street expectations.

At the time, the company had warned about its 2021 annual financial statements Results In early February, that first-quarter 2022 revenue would not meet market forecasts for a number of reasons, including increased competition.

At the top of the headwind list was advertising, which accounts for the bulk of Meta’s revenue.

The company said at the time that advertising budgets were being increasingly weighed down by rising inflation – exacerbated by the Russian invasion of Ukraine since late February.

Meta also pointed to the impact of an Apple software update late last year that had allowed iPhone users to opt out of ad tracking.

This has made it harder for businesses and groups, the company said, to understand their market and could result in a $10 billion drop in ad sales in 2022.

While acknowledging that the situation remained difficult, Meta reported daily active user counts that delighted the market thereafter Facebook recorded its first decline ever in the last quarter of 2021.

The numbers using Facebook alone rose 4% from the year-ago period to 1.96 billion.

Meta lost $200 billion in market value in a single February day after warning of sales pressure

Shares — which were down 48% year-to-date — rose more than 13% in extended trading following the release of first-quarter earnings.

They also showed that a 31% increase in spending had taken the shine off profits, with net income falling 21% to $7.5 billion.

Regarding the outlook, the company said: “We expect total sales to be between $28 billion and $30 billion in the second quarter of 2022.

“This outlook reflects a continuation of trends that impacted revenue growth in the first quarter, including weakness in the second half of the first quarter that coincided with the war in Ukraine.”

Ahead of the results release, AJ Bell analyst Danni Hewson wrote, “Robust ad spend is critical to the success of meta…Marketing budgets are being slashed as companies adapt to the current environment.

“Not only do they have to think about their own financial health, but the reality is there is no point in wasting money with consumers trying to persuade them when they don’t have money to spend.

“Then there’s Meta itself. It might have a new name, but it’s the same old business and in the case of Facebook, it just feels a little musty.

“When advertisers have cash to splash, they’re going to want to get the biggest bang for their buck, and many will look at Facebook’s demographics and wonder if other platforms might better serve their needs.”

Facebook parent Meta reports weakest revenue growth in a decade as ad sales suffer | business news

Source link Facebook parent Meta reports weakest revenue growth in a decade as ad sales suffer | business news

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