CEO of Meta Mark Zuckerberg continues to face an unfriendly year, as he reports another quarter of falling revenue after Meta’s value plunged by $89 billion.
In New York, Meta shares fell by 25% as the world’s largest social networking app joined other Big Tech companies in notifying that an economic slowdown was hurting its advertising businesses as brands had cut back on marketing.
According to a Bloomberg report, data reveals that Mark Zuckerberg currently has a net worth of $37.7 billion, a startling decline from a peak of $142 billion in September 2021.
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Experts attribute the fall in Meta’s revenue to the growing competition it is facing from strong competitors like short-form video app TikTok, as well as difficulties in targeting and evaluating advertising due to Apple’s privacy policy shifts.
According to Meta, it disclosed that revenue in the current quarter would be in the $30 billion to $32.5 billion range, compared to analysts’ expectations of $32.2 billion.
The net financial income of the company dropped 52% to $4.4 billion in the third quarter, falling short of consensus estimates of $5 billion. Meanwhile, revenues fell 4% to $27.71 billion, the slowest rate of growth since going public in 2012.
Mark Zuckerberg stated that the company has so far faced near-term challenges in revenue but he strongly believes that the fundamentals are there for a return to stronger revenue growth. He however disclosed to investors at the company that he is pretty confident everything will go in a positive direction for the company.
During a conference call with analysts, he also disclosed his comeback plans, such as launching a short-form video format that will compete with TikTok, business messaging, and the metaverse. He, therefore, reassured investors that he is confident his strategies would pay off in the long run.
Notably, investors had already questioned Meta’s decision to spend heavily on Zuckerberg’s vision of creating a digital avatar-filled world known as the metaverse, which grew rapidly during the coronavirus pandemic.
This like Meta’s other virtual and augmented reality projects is not expected to yield results for many years. Meanwhile, Reality Labs, the company’s metaverse unit, saw revenues nearly drastically reduced to $285 million in the third quarter, while losses were $3.7 billion, up from $2.6 billion in the previous year. The company anticipates that operating losses in the unit would increase significantly year over year in 2023.
In a bid to cut costs to improve its revenue, Meta is making significant changes across the board to enable efficient operation and has also increased scrutiny on all areas of operating expenses.
However, the company via a statement disclosed that these implementations will take time to play out, adding that some attempts to find savings, like reducing its workspace and enabling remote work among its workers, would result in incremental costs in the near term.