The parent company of Facebook, Meta Platforms (NASDAQ:META), reported its first-ever revenue decrease in the second quarter of 2022 as a result of increasing TikTok competition and significant economic challenges.
Meta’s revenue decreased by 1% to $28.8 billion from $29.1 billion in the same quarter a year ago, driven by a $430 million loss in advertising income.
Meta (NASDAQ:META) CEO Mark Zuckerberg announced a reduction in employment and the reversal of some investments in light of the recent sales trajectory.
Zuckerberg said in his company’s earnings call that it appears the US has entered an “economic downturn” that will “have a broad impact on the digital advertising business.”
He added: “It’s always hard to predict how deep or how long these cycles will be, but I’d say that the situation seems worse than it did a quarter ago.”
One of the difficulties Meta is currently facing is the ongoing shift to short-form video content, or Reels, in reaction to TikTok’s rising popularity.
And while because Reels’ usage is expanding quickly, this is really hindering revenue growth because it diverts focus from articles or the news feed, which are easier to monetize.
Zuckerberg is cautiously hopeful about the difficulties that lie ahead.
“Previously challenging periods have been transformational for our company and helped us develop our next generation of leaders … I think we’re going to come through this period as a stronger and more disciplined organization,” he said.
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