Meta (Facebook, Instagram) saw its revenue decline 1% year on year in the second quarter, to $28.8 billion, a first in the history of the social media giant.
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Its net profit fell 36% to 6.7 billion, the Californian group suffering competition from other platforms like TikTok and budget cuts from advertisers due to the poor economic situation.
For the current quarter, Meta expects revenue of between $26 billion and $28.5 billion.
A forecast that shows that the group “has a mountain the size of Everest to climb,” reacted analyst Dan Ives of Wedbush Securities.
On Wall Street, the company’s stock lost more than 4% in electronic trading after the close of trading.
On the audience side, Facebook has about 1.97 billion daily active users, up 8 million from last quarter, and 2.934 billion monthly active users, down 2 million from the end of March.
In all, as of June 30, 3.65 billion people worldwide use at least one of the group’s four networks and messengers – Facebook, Instagram, WhatsApp and Messenger – every month.
Meta has been watched like milk on fire by the market since the beginning of the year, when the group first announced that it had lost users on its original social network, Facebook.
About one million active daily users left the platform during the last three months of 2021 (1.929 billion at the end of December).
Since early February, the share price has halved and more than $400 billion in market capitalization has gone up in smoke.
“I’ve covered Meta for years, and I’ve never been so worried about the future of the company,” said Insider Intelligence analyst Debra Williamson.
The world’s second largest digital advertiser derives its power from its ability to accurately target hundreds of millions of users, in an environment where they spend time on a daily basis, socializing or having fun.
“But Meta is losing its grip on its huge audience,” noted the expert.
“Its US Facebook user base is barely growing, and while Instagram is helping to move the boat forward, we’re starting to see a slowdown with teens and young adults,” she said.
The photos and videos app was the subject of controversy this week, when celebrities Kim Kardashian and Kylie Jenner called on the network to “go back to Instagram” and “stop trying to be TikTok”.
The post was widely picked up by many users, who resented the platform mimicking the hugely popular TikTok.
Meta, like Google on YouTube, has indeed copied the format of short and captivating videos from TikTok, published by creators and recommended to users thanks to a very powerful algorithm.
The major platforms are also suffering from the economic situation, which is forcing advertisers to cut their marketing budgets, and from Apple’s data privacy changes, which have reduced their leeway in terms of personalization of advertisements.
Last week, Snap plunged 40% in the aftermath of disappointing financial performance, despite a notable jump in the number of Snapchat users.
And Google on Tuesday posted the slowest year-over-year revenue growth rate since the second quarter of 2020, when advertisers abruptly shut the floodgates at the start of the pandemic.
Last fall, Facebook rebranded itself as Meta to signal a pivot to the “metaverse,” billed as the future of the internet, a parallel universe accessible in augmented and virtual reality (AR and VR).
“But as the company is forced to refocus on its fundamentals, its initiatives in the metaverse have lost momentum,” noted Debra Williamson.
On Wednesday, the US competition authority (FTC) also announced that it had launched legal proceedings against Meta to prevent it from buying out Within Unlimited and its virtual reality (VR) exercise application, Supernatural.
The FTC believes that the American group wants to “buy market share instead of gaining it on merit”, as it had done, according to it, in the 2010s, by buying Instagram and WhatsApp messaging.
