Meta drops $65bn after weak quarterly earnings

On Wednesday, October 26, the Meta corporation (recognized as extremist and banned in the Russian Federation) introduced activity report for the third quarter. Its revenue was down 4% to $27.7 billion, the second in Meta’s history and the biggest drop in revenue, the first time revenue declined in the previous quarter. The company’s net income fell 52% to $4.4 billion. Such quarterly results were very disappointing for investors – Meta’s shares fell 20% on Wednesday, lowering the company’s capitalization by about $65 billion to $350 billion. Meta has been facing problems for several years now. quarters. Competition with other social networks is intensifying, at the same time, the overall macroeconomic situation negatively affects the digital advertising market.

At the same time, it is becoming increasingly clear that Mark Zuckerberg’s large-scale project, launched at the end of last year – the creation of a metaverse – requires large expenses and, at the same time, cannot have a positive impact on business in the short term. The unit’s third-quarter revenue nearly halved to $285 million, while the loss increased 42% to $3.7 billion. “Meta is in a precarious position when it comes to the current state of its business. Zuckerberg’s decision to focus the company’s attention on the future prospects of the metaverse distracts him from today’s unfortunate realities,” said Debra Aho Williamson, an analyst at Insider Intelligence.

The company is reporting overall spending growth, ranging from $85 billion to $87 billion this year and $96 billion to $101 billion next year. But the company is trying to cut costs. At the end of September, Bloomberg reportedthat Mr. Zuckerberg announced to Meta employees about cutting costs and freezing new hires.

The macroeconomic situation and the reduction of advertising budgets by companies affects other technology corporations. Tuesday Alphabet reported about the weakest quarterly earnings growth in almost a decade, and last week Snap informed about increasing the loss five times, after which his shares fell by 27%.

Yana Rozhdestvenskaya