Meta-fall in the stock market: Zuckerberg paints a complicated end of the year in income

The slowdown in advertising investment attacks on two fronts Meta Platforms: the incipient economic recession in the main markets in which it operates and the pressure of the unstoppable rise of Bytedanceowner of TikTokas its main competitor in social networks.

The dazzling business figures of the owner of Whatsapp, Instagram, Oculus and Facebook hide a sharp slowdown. The technology registered some revenue in the third quarter of 2022 4% lower to those of 2021, up to 27,714 million dollars, while its net profit stood at 4,395 million, 52% less That the last year. Meta closed the quarter with a cash position of 41,780 million dollars and long-term debt of 9,920 million.

Meta shares plunge on Wall Street after hours, where movements after the close of the regular session are recorded. Specific, the titles of the technology plummet 11%, to 114 dollars, after leaving 5.6% until 10:00 p.m. The reason for the massive sales is in the bad omens launched by its founder for the fourth quarter and its weak forecast of income.

imprint of TikTok It is felt in the Facebook headquarters, which has imitated some of the features of the Chinese network to retain its audience. mark zuckerbergfounder and CEO of Meta, has highlighted the smooth running of the launch of reels for instagramalthough he warns of the complicated scenario for the company in the remainder of 2022, especially in the group’s income line.

“Yes ok we face short-term challenges in terms of income, the fundamentals are there to return to stronger revenue growth. We approach 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge as an even stronger company,” he explained at the presentation.

Meta ended September with a number of daily active users (DAP) of 2,930 million accounts between all its applications, 4% more than the previous year. In monthly terms (MAP), the number of active accounts rises to 3,710 million, 3% more. Of these, the largest part is still provided by Facebook with 1,980 million/day (+3%) and 2,960 million/month (+2%).

Profit warning, layoffs and the hole in the metaverse

David WehnerCFO of Meta, warned that revenues will be lower than expected in the fourth quarter of 2022, pointing to a range of 30,000 to 32,500 million dollars in expected net sales: “Our guidance assumes that foreign currency will be an obstacle of about 7% for year-over-year total revenue growth in the fourth quarter, based on current exchange rates.

Wehner warns of a refocusing of some of the activities in 2023 to “operate more efficiently”among them, one possible possible restructuring of its workforce globally. At the end of September, its number of employees stood at 87,314 workers, 28% more than in the same period of the previous year. In 2023 they may be less.

“We are keeping some teams flat in terms of headcount, cutting others and investing headcount growth only in our highest priorities. As a result, we expect headcount at the end of 2023 to be roughly in line with levels in the third quarter of 2022“, warns the company in its results note.

Despite the fact that Meta is one of the most profitable companies in the world due to its ability to turn a good part of its sales into profits, the new technology strategy towards metaverse contains a bottomless pit right now. The unit of Reality Labs continues to lose money by the bucketful while continuing to invest in the virtual world like no one else in the world.

We anticipate Reality Labs operating loss in 2023 to grow significantly year over year. Beyond 2023, we expect to accelerate Reality Labs’ investments so that we can achieve our long-term goal of increasing the company’s overall operating income,” Wehner advises investors.

Meta expects your capital expenditure (Capex), including financial lease payments, are in the range of $32-33 billion, in line with the $30-34 billion previously forecast. By 2023, it raises that figure to 34-39 billion due to the need to invest in data centers, servers and network infrastructure: “An increase in the capacity of AI (artificial intelligence) is driving substantially all of our capex growth in 2023.”

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Meta-fall in the stock market: Zuckerberg paints a complicated end of the year in income