Facebook’s parent meta reports weakest revenue growth in a decade as ad sales suffer | Business Newsletter

Facebook’s parent company reported its weakest revenue growth in a decade but has seen a partial recovery in its share price after the harsh 2021 so far for the company.

Meta . Platform revenue recorded $27.9 billion from January through March — slightly below Wall Street expectations.

The company warned at the annual time of 2021 results In early February, revenue for the first quarter of 2022 will fall short of market forecasts for a number of reasons, including increased competition.

Topping the list is advertising, which makes up the bulk of Meta’s revenue.

The company then explained that advertising budgets were under increasing pressure due to rising inflation – exacerbated since late February by Russia’s invasion of Ukraine.

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

This makes it more difficult for companies and teams to understand their markets, the company explains, and this could lead to advertising revenue reaching $10 billion by 2022.

While Meta admits that the situation is still difficult, it reported a number of daily active users that satisfied the market after Facebook recorded its first decline in the final quarter of 2021.

Facebook usage alone increased 4% year-on-year to 1.96 billion.

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

Shares – which are down 48% year to date – rose more than 13% in extended trading after the release of first-quarter numbers.

They also showed a 31% jump in spending dented profits, with net income falling 21% at $7.5 billion.

On the outlook ahead, the company said: “We expect total Q2 2022 revenue to be in the range of $28 billion-30 billion.

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

Before announcing the results, AJ Bell analyst Danni Hewson wrote: “Strong ad spend is critical to Meta’s success… Marketing budgets are being offset as companies grow adjusted according to the current situation.

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

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

“If advertisers have the money to splurge, they’ll want the biggest bang for their buck, and many will look at Facebook’s demographics and wonder if other platforms might be a better fit.” with their needs or not.”

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