Mark Zuckerberg cuts back Metaverse as Facebook parent firm posts slowest quarterly revenue growth in DECADE: Company profit rises 7% ‘as it battles tech giant rivals and advertisers’ fears over privacy’ – but stocks still soar 17%
- Meta shares jumped as much as 17% in extended trading on Wednesday
- Investors were cheered that user numbers did not decline for a second quarter
- But revenue growth was its slowest since Facebook’s IPO in 2012
Meta CEO Mark Zuckerberg has called on the Facebook parent company to scale back the Metaverse after it saw its slowest quarterly revenue growth since 2012.
The company’s total revenue, the bulk of which comes from ad sales, rose 7 percent to $27.91 billion in the first quarter, but missed analysts’ estimates of $28.20 billion, according to IBES data from Refinitiv.
The company only earned profits of $7.47 billion, or $2.72 per share, in the first quarter, which is down 21 percent from $9.5 billion, or $3.30 per share, in the same period a year earlier.
Zuckerberg told the Verge that given the company’s ‘current business growth levels,’ he is ‘now planning to slow the pace of some of our investments,’ including the Metaverse, the company’s virtual world project.
Despite missing the mark on revenue, shares of Meta jumped nearly 17 percent in extended trading after the company reversed the troubling declines in active users that it reported in the prior quarter when it had lost more than 1 million users.
Meta said that it had 1.96 billion daily active users for the quarter, versus the 1.95 billion that Wall Street analysts had expected.
Meta CEO Mark Zuckerberg is pictured. The company on Wednesday recorded its slowest revenue growth in a decade
‘We made progress this quarter across a number of key company priorities and we remain confident in the long-term opportunities and growth that our product roadmap will unlock,’ Zuckerberg said in a statement.
‘More people use our services today than ever before, and I’m proud of how our products are serving people around the world,’ he added.
Meta CFO David Wehner said in the earnings release that Russia’s invasion of Ukraine had negatively impacted the company’s sales in the latter half of the first quarter, and said the war would continue to weigh on revenue this year.
Recent privacy changes by Apple have made it harder for companies like Meta to track people for advertising purposes, which also puts pressure on the company’s revenue.
For months now, Meta has been warning investors that its revenue can’t continue to grow at the breakneck pace they are accustomed to, so it’s likely that the quarter’s single-digit revenue growth was already baked into investors’ expectations.
Investors seemed oblivious to the financial results, and sent Meta shares soaring after-hours on the basis of growth in the company’s user base
Yet investors seemed oblivious to the financial results, and sent Meta shares soaring on the basis of growth in the company’s user base.
Three months ago, Meta stunned investors by reporting its first ever decline in users.
Developing story, more to follow.