Tuesday, May 17

Ambitious Meta disappoints with declining profits and fewer Facebook users

Meta, the parent company of Facebook and Instagram, which wants to reinvent itself with the metaverse, saw its net profit drop in the fourth quarter and the number of users of its platforms stagnate at the end of the year, an unprecedented observation for the giant. social networks.

As of December 31, 2021, 2.8 billion people visited one of its four services (Facebook, Instagram, Messenger and WhatsApp) at least once a day and 3.6 billion at least once a month.

Figures up slightly over one year, but almost equivalent to those of the third quarter.

The original social network, Facebook, has lost around 1 million active daily users in three months (1.929 billion at the end of December).

Dave Weiner, the group’s chief financial officer, cited an unfavorable comparison with previous months, when the resurgence of Covid in Asia would have accelerated the adoption of the service.

“We also believe competing platforms are hurting our growth, especially with younger audiences,” he said on a conference call for analysts.

“People have a lot of choices about how they want to spend their time. And apps like TikTok are growing very quickly,” said Mark Zuckerberg, founder and CEO of Meta.

The company’s executives have mentioned competition from TikTok but also from other networks on several occasions, while they face numerous investigations and complaints for abuse of a dominant position.

– The apple nibbles the margins –

On the financial side, Meta posted revenue of $33.67 billion, in line with its forecast, but it generated “only” $10.3 billion in net profit in the fourth quarter, or 8% less than last year.

Its title fell by more than 22% during electronic trading after the closing of the New York Stock Exchange on Wednesday.

As an explanation for this disappointing performance, Meta mentioned the competition and the difficulties in the supply chain suffered by its clients, the advertisers.

The Californian group also noted that its users spent more time on “Reels”, a short video format inspired by the TikTok application “which generates lower pay rates” than traditional Instagram formats.

Above all, he had warned that the rules imposed by Apple last year in terms of advertising targeting could have negative consequences on its results.

The Apple brand requires app publishers to request permission to collect data, much to the chagrin of companies like Meta whose business model is based on selling personalized ads based on consumer tastes.

This ethical and technical change “affects Meta’s ability to assess the performance of advertising campaigns,” commented Debra Aho Williamson, analyst at eMarketer.

“We estimate that some advertisers began to partially withdraw from Meta in late 2021 and early 2022, to test alternative digital channels.”

– Expensive avatars –

These are the first results that the American group has published since its name change at the end of October.

Mark Zuckerberg then announced that he wanted to focus on the “metaverse”, considered in Silicon Valley as the future of the internet: a parallel universe where the public will use augmented or virtual reality glasses to interact, work or be entertained.

But its construction has so far translated into tens of billions of dollars of investment in the Facebook Reality Labs branch.

Adam Mosseri, the boss of Instagram, announced on Wednesday that users can now create their avatar, intended to serve as an identity in the metaverse.

“It’s a virtual representation of who you are, more dynamic than a profile. You’ll have clothes you can wear (…) and also money, and any digital goods you own” , he said in a video.

The goal is for people to be able to “take that identity and those assets wherever they go in the metaverse, on apps built by Meta or by any company in the world,” he added.

“There is a lot of uncertainty surrounding these investments,” Ms. Williamson noted.

“Meta will no doubt experiment with ads and e-commerce in its Metaverse apps this year, but these efforts will be very experimental and are unlikely to result in much revenue in the near term.”

Investor confidence is also damaged by the major failure of Diem, the digital currency project launched with great fanfare in 2019 to offer a new method of payment outside traditional banking circuits.

The independent entity that took care of it announced on Monday that it was going to dismantle for lack of having been able to convince the regulators.

Reference-www.rtl.be

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