Team cuts amid declining Meta revenues: Zuckerberg statement

The parent company of Facebook and Instagram has reported a decline in revenues. In the second quarter of 2022, Meta had a 1% drop in revenue and a 36% drop in net profit. In dollar terms, the loss comes to 28.8 billion. This is the first such decline since the same period last year.

Who is to blame

According to corporate executives, the reason for the losses is low demand for advertising. The downward trend will continue into the third quarter. With a 36% drop in net income, spending increased by 22%. At the same time, Facebook’s audience growth increased by only 3%.

Zuckerberg believes the company has entered an unpleasant period of economic regression. The downturn is having a negative impact on digital advertising revenue. The CEO of Meta believes that the trend is reducing investment and pushing back the benefits for a longer period, not 2-3 years.

What to do

The corporation has decided to cut its losses by reducing the number of employees. In order for the company to survive, it is important to redistribute energy within Meta. Some teams will be disbanded and the remaining teams should work hard and have minimal impact on the long term plans for the future.

The decline in advertising revenues has also been seen in services such as Snap. At the same time, share prices have also fallen markedly. Ruth Porat, Alphabet’s chief financial officer, complained about falling profits. Against the backdrop of advertisers leaving, revenue at the popular YouTube site was just $7.3 billion.

As recently as a month ago, Zuckerberg warned employees that bad times were coming. Teams should prepare for severe downturns. The corporation has cut recruitment of new employees and cut hiring of engineers by 30%.

An insider at the company has revealed that big layoffs are coming at Meta. On average, up to 10% of employees are going to be laid off. While the corporation was actively recruiting many new employees at the beginning of 2022, it is now starting to optimize. Mark Zuckerberg wants to survive the economic downturn with fewer staff, focusing on discipline and increased workload.

Simultaneously with these developments, the Federal Trade Commission was considering a complaint about another corporate acquisition (Within). Zuckerberg believes his company’s future is in the digital world (“meta-universe”). The market is down another $2.8 billion. The Facebook creator warned not to expect revenues until the end of the decade. The company has to rebuild its advertising infrastructure after its defeat with Apple. “Apple has allowed its users to opt out of the online tracking imposed by Meta.

Now the corporation is pinning its hopes on Reels. The service is set to become a counterpart and direct competitor to TickTock. Even Facebook’s chief operating officer sees significant revenue potential in the future. To make a competition to TikTok, the company is pushing hard for a short vertical video service.

This aggressiveness has caused displeasure among Instagram users, who are used to posting photos. Adam Mosseri, the site’s head, assured the audience that videos are the future. People will have to get used to the fact that there will be more videos on the service. Already, viewing of mini-movies has increased by 30%.

A reshuffle of top managers is scheduled for November this year. Meta’s CFO D. Venus will be moved to the position of strategic director. S. Lee, vice president for finance, will become CFO.