Status: 04/28/2022 11:04 a.m
The US group Meta is again reporting higher user numbers for its services such as Facebook, WhatsApp or Instagram. But the company’s sales are only growing slowly – and soon not at all?
Meta, the parent company of Facebook, regained popularity among users in the first quarter. Most recently, 2.87 billion users used at least one service from the meta group every day, in addition to Facebook, Messenger, WhatsApp, Instagram and the virtual reality company Oculus. In the previous three months it was 2.82 billion. 1.96 billion users accessed Facebook every day – around 30 million more than three months earlier.
Tiktok clone “Reels” is growing
Three months ago, Facebook was still reporting a drop of one million users per day, sending the Meta share plummeting. At the time, Meta cited increased competition from the Chinese short video app TikTok as the reason and published its competing service “Reels” in the first quarter.
According to Meta CEO Mark Zuckerberg, users on the Instagram app watched Reels videos about a fifth of the time. Videos accounted for half of Facebook’s viewing time, and Reels is growing there, too, according to the company’s founder.
Apple makes life difficult for Meta
Nevertheless, the growth of the successful group weakened, also due to lower advertising budgets and Apple’s new data protection rules. Apple’s measures make it more difficult to personalize advertising, thereby reducing advertisers’ willingness to pay.
Revenue increased in the first quarter year-on-year by just seven percent to $27.9 billion. That was a very low increase for the successful group, which was also below the expectations of the analysts. The bottom line is that profits fell by a good fifth to 7.5 billion dollars due to significantly higher expenses, including for new employees and investments in products.
Meta has recently invested heavily in the development of virtual worlds, the so-called Metaverse. Meta spend increased 31 percent in the first three months compared to the same period last year. According to its own information, the group employed 77,805 people at the end of March – an increase of 28 percent year-on-year.
War slows down the advertising business
For the current quarter, Meta announced sales of between 28 and 30 billion dollars. With a previous year’s value of 29 billion dollars, there could even be a drop in sales. Among other things, the group refers to the weakening of business due to the Russian war of aggression against Ukraine. According to Meta, this is not only due to the stoppage of the advertising platform in Russia, but also to the fact that concerns about the economic consequences of the war are slowing down advertising customer activity overall.
Nevertheless, investors reacted positively. Meta shares rose 18 percent in after-hours trading. However, the paper has lost almost half of its value since the start of the year.