Zuckerberg calls for ‘patience’ as Meta’s costs threaten investors

(Bloomberg) — Mark Zuckerberg, CEO of Meta Platforms Inc., has asked digital advertising companies to be patient with the social media mogul for unproven bets at an already challenging time. 20% in late trading after disappointing quarterly earnings forecasts. In a phone call on Wednesday, Zuckerberg tried to justify Metaverse’s burgeoning costs to fund the virtual reality version of Metaverse and the artificial intelligence that fuels major changes in social networks. Investors have already lowered the stock by 61% this year. , have not bought so far. Zuckerberg said he’s confident that Meta’s biggest bets are headed in the right direction in areas like short-form video, business messaging, and the metaverse. He wasn’t sure how big the outcome would be.” Zuckerberg said, “we’ll tackle each of these issues over a different period of time.” And I appreciate your patience and those who persevere and invest with us will eventually be rewarded. The company expects already declining revenues to be lower than analysts had expected and higher costs. Mehta on Wednesday said third-quarter revenue was down 4.5% year-over-year, the second straight from the previous quarter. It was the fourth decline in the company’s revenue. Meta expects this trend to continue during the last three months of the year. The company’s fourth-quarter forecast came out as the lowest among analysts’ estimates, and Meta now has a total cost of $85 billion this year. It is expected to be ~$87 billion. That number is expected to rise from $96 billion to $101 billion by 2023, the company said on Wednesday. Continue the storyRead More: Meta plunge as sales forecasts show depth of ad market weakness Meta is already wrestling with declining marketer spend due to both economic uncertainty, and privacy policy changes at Apple Inc. that made all social media advertising less effective. The company is slowing hiring and narrowing priorities on social media platforms. It has cut costs by staying relevant and focusing on expanding its virtual reality offering, the effort is losing billions of meta, and the company expects to lose more money in its metaverse business next year: Alphabet Inc. and Snap Inc. is hit by similar sluggish results, and is the only company to overhaul how social media platforms work, spending $1 in $10 in revenue in a hypothetical future a few years away. We’ve changed the Facebook and Instagram experience to show the algorithm, the content selected and the number of posts from people you follow are reduced. Also, ByteDance Ltd. is prioritizing a short format video called Reels in response to the popular TikTok app. It remains popular enough to generate advertising revenue that will fund Zuckerberg’s metaverse vision. In Q3, with 2.93 billion daily active users, 4% more people spent daily on the Meta platform compared to the same period last year. Its app suite, including monthly messenger and WhatsApp, has 3.71 billion active users. And marketers spend $3 billion a year on advertising. However, Reels is taking in close to $500 million in revenue in its most recent quarter, as newer products are eroding other ad space that monetizes at a faster rate. “It could take up to 18 months for that to change,” said Brent Thill, analyst at Jefferies LLC. “What investors are feeling now is that there are too many experimental bets compared to verified bets.” Earnings call with Meta management Zuckerberg has previously called for patience. Investor Questions in 2015 focused on when WhatsApp, Instagram and Messenger will make money. The difference at the time was that those applications already had hundreds of millions of users each. “Meta must transform the business,” said Debra Aho Williamson, analyst at Insider Intelligence. “Facebook Inc. was a revolutionary company that changed the way people communicate and the way marketers interact with consumers. It’s no longer innovative today.” (Updated with details in the earnings report starting in paragraph 5) Most read on Bloomberg Businessweek©2022 Bloomberg LP
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