A fall in advertising revenue in the three months before July, which led to the company’s first-ever year-over-year revenue decline, severely hurt the owner of Facebook and Instagram.
Despite a 1% decline in overall sales to $28.8 billion (£23.7 billion), Meta was able to fend off a decline in users.
Analysts are concerned that the company’s growth may have peaked after years of tremendous advances.
Although more companies are vying for advertising dollars, TikTok and other rivals have lowered its popularity.
Meta, which typically controls more than 20% of the global ad market, warned investors that ad sales were likely to decrease once more in the months to come as e-commerce spending declined from its pandemic boom. This is because businesses become more cautious with their spending due to concerns about inflation and the conflict in Ukraine and as e-commerce spending declines from its pandemic boom.
The CEO of Meta, Mark Zuckerberg, announced that the company would reduce hiring “steadily” over the coming year in response to the downturn and its plans to refocus investment into new areas, such as Horizon, its virtual reality platform, to capitalise on the so-called metaverse, which he believes will be its best opportunity for growth.
Due to monopolistic concerns, the Federal Trade Commission, the country’s consumer protection body, announced it will sue to halt Meta’s acquisition of the virtual reality fitness firm Within Unlimited, which is the owner of the software Supernatural.
Earlier this year, Facebook revealed its first-ever decline in daily users.
Because of this, the company—which also owns WhatsApp—recently modified the algorithms on Instagram and Facebook so that they act more like TikTok, suggesting postings to users from accounts other than the ones they already follow.
Nikhil Lai, the senior analyst for performance marketing at Forrester Research, asserts that because it relies on small and medium-sized businesses, which are “spooked” about the economy, Meta is particularly vulnerable to any market slump.
Apple’s well-refined targeting system for advertisements was upset when it altered its privacy settings last year.