The social media giant since the last decade witnessed a fall in revenue for the first time after going public in 2007. This could be an eye opener for Zuckerberg and Co as experts predict even more fall in revenue and point growth in the next few years.” A positive growth was seen with their investments in reels and AI” said Mark Zuckerberg, Meta CEO and Founder.
Reasons For The Decline In Revenue?
Revenue From Ad
A large portion of Meta’s revenue was from digital ads as the platform is free for users, the sales revenue fell 1% to $ 28.8 billion for Q2 whereas in the last year it had a $ 29.1 billion revenue in Q2.
Foreign Exchange
Facebook operates in almost all countries so foreign exchange is a key factor affecting its business. Sheryl Sandberg the outgoing COO of meta said the decreasing rate of the euro has affected the business a lot.
Metaverse
The board has been prioritizing the allocation of funds for the development of Meta. The AI and modern tech of the app for the future require a pot of funding which currently is happening at the cost of the downfall of Facebook.
Increase In The Workforce
The advent of meta has slowed down the growth of Facebook financially. Meta has 83,553 employees which is a 32% increase year by year.
Loss Of Confidence on Wall Street
For a public company as big as theirs the daily value of shares becomes a key factor as conglomerates raise a lot of money from equity (shares). Facebook shares saw a fall on Wednesday adding to their overall poor performance for the Quarter.
Strengthening of Dollar
With the dollar touching new heights and Facebook ascending those very heights said that if not for the strengthening of the dollar they would have reported a 3% increase.
Macroeconomic Uncertainty
This is the conditional timely standard deviation of common factors to forecast errors like consumption expenditure, and production in this case advertisement revenues.
Apple’s Privacy Policy
Apple over the years have been the arch-rival of Zuckerberg and with their new privacy policy, it has become harder to target smartphones and show them ads based on their online activity.
Despite the provocations, we shouldn’t underestimate Facebook as they have been one of the most consistent applications in the GenZ. Companies like Snapchat, Twitter, and Google have also shown a decreasing trend in revenue. The spotlight on Facebook is for its remarkable performance over the years and high expectations of the market from its new project Metaverse.
Mark Zuckerberg recently said that Facebook will be focusing on its reel growth and long-term prospects rather than maximizing short-term goals. The meta board believes in the bigger picture and has been very candid about its recent performances.
Conclusion
Experts still predict a few more quarters of loss as bad revenue for Facebook but we don’t know what the future holds for us or Metaverse.
Sources: Theverge.com and Businessinsider.in
