Meta Faces First Ever Consecutive Q2 Sales Decline, Shares Drop 17% Amid Gloomy Q4 Outlook

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Meta Platforms, the parent company of Facebook, recorded negative (-) revenue for the second consecutive quarter for the first time in history and is expected to miss market expectations for its fourth-quarter (October to December) performance this year. Amid growing disappointment in the market, Meta's stock price plummeted by more than 17%.

According to Bloomberg and other sources on the 26th (local time), Meta announced in its earnings report that its third-quarter (July to September) revenue this year was $27.714 billion (approximately 39.4 trillion KRW), a 4% decrease compared to the same period last year. After recording a 1% year-over-year decline in revenue in the second quarter?the first-ever quarterly revenue drop?Meta has now experienced a revenue decrease for two consecutive quarters compared to the previous year.

Meta's third-quarter net profit was $4.395 billion, less than half of the net profit in the third quarter of last year. Earnings per share were $1.64. Meanwhile, company expenses rose 19% year-over-year to $22.1 billion. Operating profit was $5.66 billion, down 46% compared to the third quarter of last year. Consequently, the operating margin sharply declined from 36% in the third quarter of last year to 20% this year.

Daily active users (DAU) were recorded at 1.98 billion, and monthly active users (MAU) at 2.96 billion.

By business segment, the Reality Labs division, which includes virtual reality headsets and the metaverse business, saw its revenue nearly halved to $285 million. Losses expanded from $2.63 billion to $3.67 billion. This division has recorded losses totaling $9.4 billion this year. Meta stated, "We expect Reality Labs' operating losses in 2023 to increase significantly compared to the previous year," adding, "We plan to accelerate investments in Reality Labs after 2023 to achieve long-term operating profit growth targets for the entire company."

Meta earns most of its revenue from advertising. Recently, it has been hit by economic uncertainties and Apple's update to the iOS operating system citing privacy protection.

The problem lies in the fourth quarter. Meta forecasts fourth-quarter revenue between $30 billion and $32.5 billion. Wall Street's estimated revenue is $32.2 billion, which is at the upper end of Meta's guidance.

Meta expects total costs this year to be between $85 billion and $87 billion. The company stated that next year's costs will range from $96 billion to $101 billion.

Mark Zuckerberg, Meta's CEO, said, "We are making significant changes overall to operate more efficiently," and added, "We have strengthened the review of all operating expenses." He continued, "Although we face short-term challenges in revenue, the fundamentals are in place for stronger revenue growth," and said, "Next year, we will focus on priorities and efficiency to navigate the current environment well and become a stronger company."

Following the earnings announcement after market close, Meta's stock price plunged more than 17% in after-hours trading. CNBC reported that Meta's current stock price is the lowest since July 2016.

This content was produced with the assistance of AI translation services.