Meta, Facebook’s parent company is facing serious problems in the advertising market, competition from other platforms, and the huge investment in the metaverse has a direct impact. A financial disaster has just occurred with the reveal of the most recent financial report. Which showed a 52.2% decrease in net profit for the quarter. In this article, we will discuss details about the company’s future.
The multinational has dropped out of the “Top 20” of the biggest businesses in the world by market capitalization. And is close to doing the same in the ranking of US businesses.
The company’s net profit for the third quarter was $4,395 million. A decline of 52.2% from the outcome for the same period in 2021. Although the revenue decreased by 4.5%. Which could have been due to the overall environment, the expenses and costs increased by 19%.
The trend in revenues up to September is slightly better. And even shows an increase of 0.2% when we extend the picture to the total figure for the year. But the increase in the chapter on invoices is also more noticeable. The decline in revenue from Reality Labs, the division in charge of the metaverse that specializes in augmented and virtual reality. And the expectation that expenses will continue to rise are particularly noteworthy.
What do these numbers actually mean? in a very severe stock market decline. Since the announcement, the company’s shares have dropped more than 20%, which is a significant loss in value. This is the first time they have traded below $100 since 2016 when Meta was still Facebook. And they were facing some ups and downs.
Meta has just left the top 20 most-valued companies in the world
According to the most recent data from Investing, the brand’s market capitalization is 263,000 billion dollars. Which is considerably less than the values it actually managed. It already experienced a sizable decline in February, of 26.4%. As a result of another presentation of results that had a comparable impact.
Do the rankings reflect that? Even though the rankings are just rankings, they provide context. Yes, there is a noticeable change in the case of Meta. It was removed from the list of the 20 largest companies in the world on Thursday, according to Bloomberg, which gave it a market value of 267.8 billion, placing it below Exxon, Johnson & Johnson, and major technology firms like Tesla, Amazon, Alphabet, Microsoft, and Apple. By market capitalization at the start of the year, Meta was the sixth largest company in the US.
Similar trends are indicated by Market Cap’s rankings. In the global ranking of the largest companies by market capitalization, Meta is ranked 26th. Behind Samsung, Roche, Nestlé, Mastercard, TSMC, and NVIDIA. This is according to the most recent report. It would come in at number 20 among American businesses. Close to Coca-Cola and situated between Bank of America and Pfizer.
So, what causes this? Meta faces some difficulties that explain its decline, aside from the effects of the economic slowdown on the advertising industry. Or the general structure of technology companies. The first has an impact on ads, a fundamental pillar. Apple and Google’s privacy changes have flexed their muscles. The weight of other platforms, like TikTok or Twicth, is added to this problems. Data from Meta show that its user base is still expanding. But the competition’s pressure has forced it to “tiktokize” its own platforms.
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Meta has a problem and it’s the metaverse
The metaverse, too? Without knowing the answer to this basic question, it would be difficult to accept the most recent Meta results. Zuckerberg has made a firm decision to wager on the new virtual environment. And this translates into a significant, very significant load for the brands’s coffers. Despite having already spent more than 10,000 million dollars. It claims 15,000—the company’s results are still far from meeting the expectations they have raised.
Despite a sharp decline in expected revenue growth, “Meta continues to be overly aggressive with its investments in long-term plans”. According to Mandeep Singh, a Bloomberg Intelligence analyst. Given the lack of success to date with his efforts in the metaverse. We do not know the brand’s capital and operating expense view for 2023. The accounts show the plan’s annual costs of between 85,000 and 87,000 million.
So, how about Zuckerberg’s comments? He prefers calm and confidence as he appeals to investors. After the results were public, he said. “I believe that those who are patient and invest in us will ultimately get the reward. Zuckerberg said, “While we face immediate revenue challenges, the basics are in place to return to stronger revenue growth. The company will be heavily productive in the coming year”.
Antitrust cases against the company
Mark Zuckerberg, the CEO of Meta, should testify by the Federal Trade Commission in its case against the business. In an effort to prevent Facebook from acquiring Within Unlimited. It’s the company behind the popular VR workout app Supernatural, the FTC sued the social media giant in July.
Also, according to Reuters, the agency listed 18 witnesses in a court document submitted on Friday to California’s Northern District Court, including Zuckerberg and Meta CTO Andrew Bosworth. According to court documents viewed by Reuters, the FTC intends to question Zuckerberg about Meta’s VR strategy. And how the company plans to support third party developers in addition to questions regarding the potential buy.
In addition, the FTC charged the business and Zuckerberg with trying to “unfair acquire” Within in July. John Newman, deputy director of the FTC’s Bureau of Competition, said at the time, “Instead of competing, Meta is trying to buy its way to the top”.