Facebook-parent Meta reported Wednesday that its profit more than halved to $4.4 billion in the third quarter from $9.2 billion a year earlier, and said it plans "significant changes" to bolster efficiency in a tough economic environment.
The social networking giant, which faces stagnating user
numbers and cuts in advertising budgets, also said revenue slipped to $27.7
billion from $29 billion a year earlier.
"We're approaching 2023 with a focus on prioritization
and efficiency that will help us navigate the current environment and emerge an
even stronger company," said Meta chief Mark Zuckerberg.
Meta shares plunged 19.1 percent to $105 in after-market
trades, the price less than a third of what it was at the start of this year.
"While we continue to navigate some challenging
dynamics - a volatile macro economy, increasing competition, ad signal loss and
growing costs from our long term investments -- I have to say that our product
trends look better from what I see then some of the commentary I've seen
suggests," Zuckerberg told analysts on an earnings call.
The number of monthly active users at Facebook was up just
two percent to 2.96 billion at the end of September, Meta reported
Meanwhile, the number of employees at the tech titan tallied
87,314, a 28 percent increase from a year earlier, the earnings report stated.
"We are making significant changes across the board to
operate more efficiently," Meta said in the release.
The Silicon Valley-based tech firm said that it expects to
hold headcount levels in check over the next year.
Zuckerberg said that while tightening its belt, Meta will
focus on its artificial intelligence that powers recommendations at offerings
such as short-form video feature Reels, as well as ad messaging platforms and
its vision for the metaverse.
Apple squeeze
Big tech platforms have been suffering from the economic
climate, which is forcing advertisers to cut back on marketing budgets, and
Apple's data privacy changes, which have reduced leeway for ad personalization.
"Meta is on shaky legs when it comes to the current
state of its business," said Insider Intelligence principal analyst Debra
Aho Williamson.
"Mark Zuckerberg's decision to focus his company on the
future promise of the metaverse took his attention away from the unfortunate
realities of today."
Those realities include Meta being under pressure due to
global economic conditions, competition including TikTok, and Apple letting
iPhone users curb collection of data "signals" for targeting
money-making ads, according to the analyst.
Apple last year began letting iPhone users decide whether to
allow their online activity to be tracked for the purpose of targeting ads -- a
change which it said shows its focus is on privacy, but which critics note does
not prevent the company itself from tracking.
Meta expected that policy, which impacts the precision of
the ads it sells and thus their price, to cost the social media giant $10
billion in lost revenue this year.
This week, Apple updated its App Store rules to require that
apps offered there use its payment system for sales of "boosted"
posts, which are essentially ad messages promoted to the top of social media
feeds for a price.
The App Store is the lone gateway for digital content to get
onto iPhones or iPads.
The change means that Apple will be able to collect its 30
percent commission on that type of advertising at Facebook and Instagram, where
all the money made previously had gone to Meta because they used their own
payment system.
"Apple continues to evolve its policies to grow their
own business while undercutting others in the digital economy," Meta said
in reply to an AFP inquiry.
"Apple previously said it didn't take a share of
developer advertising revenue, and now apparently changed its mind."
Meta had long delivered seemingly endless upward growth, but
reported early this year its first decline in global daily users.
In July, Meta reported its first quarterly revenue drop and
a plunging profit.
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