Facebook ignores fears of losing users: NPR

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Shares of Facebook parent company Meta surged after reporting a return to user growth, even as the company’s profits fell and sales growth slowed.

Jenny Kane/AP


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Jenny Kane/AP


Shares of Facebook parent company Meta surged after reporting a return to user growth, even as the company’s profits fell and sales growth slowed.

Jenny Kane/AP

More people used Facebook in the first quarter than analysts expected, easing concerns over competition from TikTok that led the world’s biggest social network to lose users for the first time last year.

Shares of Facebook parent Meta surged on Wednesday afternoon after the release of its latest earnings report – even as the company’s profits fell and sales growth was the slowest since its launch. IPO ten years ago.

Investors have worried about Facebook’s growth since it last reported financial results in January, showing its daily user base has shrunk. This sparked Meta’s worst day on Wall Street and continued to drive the stock price lower, slashing the company’s market value by nearly half year-to-date.

At the time, CEO Mark Zuckerberg pointed the finger at TikTok, saying the hugely popular short-form video app is quickly attracting users and advertising dollars. His comments added to growing fears that Facebook and Instagram are losing ground among the next generation of internet users.

On Wednesday, Meta said Facebook’s daily active user count rose to 1.96 billion in the first three months of this year, ahead of Wall Street estimates of 1.94 billion.

Zuckerberg said Facebook and Instagram were working on new products and features to compete with TikTok, including its copycat short video format Reels, which now accounts for more than 20% of the time people spend on Instagram.

The company will also rely more on artificial intelligence to recommend content to users on Facebook, even if it’s not posted by their friends and family or other accounts they follow, the CEO said. . It’s similar to how TikTok’s main “For You” page works.

Despite the return to user growth, Meta’s revenue grew at the slowest rate since the company went public in 2012. Sales rose 7% to $27.9 billion, due to the Russia’s war in Ukraine and Apple’s new privacy settings, which make it harder for Meta to sell targeted products. ads, weighed on the company’s advertising business.

Profit fell 21% to $7.5 billion. Although better than analysts had expected, it was the second consecutive quarter of declining earnings.

The financial strain highlights the challenges Meta faces as it transitions from its current focus on social media to what’s being called the “metaverse,” a set of immersive virtual experiences that Zuckerberg says are the future of business.

Meta plans to spend a lot to build the necessary VR software and hardware, and Zuckerberg said it will be years before the Metaverse is a fully realized endeavor. In the first quarter, losses at its metaverse-focused Reality Labs division were nearly $3 billion.

But Meta is finding other places to cut costs and says it will spend $3 billion less this year than it originally planned.

“With our current growth levels, we now expect to slow the pace of some of our investments,” Zuckerberg told analysts on a conference call Wednesday. He said that going forward, the goal is for Meta’s existing social apps to generate enough profit to fund his spending on the Metaverse.

Gene Munster, managing partner at venture capital firm Loup Ventures, said the results reflected the success Meta already has in managing costs.

“It flies in the face of the narrative that the company is spending too much,” he said. wrote on Twitter.

Editor’s note: Meta pays NPR to license NPR content.

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