Mark Zuckerberg, the founder of Facebook, has jeopardized the future of his company in an immersive online world known as the Metaverse. On Wednesday, the company revealed that it’s still going through that transformation.
Meta, the company formerly known as Facebook, reported profit of $7.5 billion for the first quarter, down 21 percent year-on-year. Revenue increased 7 percent to $27.9 billion. Wall Street analysts had forecast earnings of $7.1 billion on sales of $28.2 billion.
The results followed those of Meta gloomy financial report in February, as the company also saw falling profits and slowing user growth. The next day, Meta’s stock plummeted 26 percent and its market value plummeted more than $230 billion as the company experienced its largest one-day wipeout ever.
The two quarters were the company’s first consecutive earnings declines in more than a decade, a sign of the difficulties it encounters in changing course. While Meta spends big bucks on Metaverse-related products like virtual reality goggles, it’s far from certain that people will want to buy such gadgets. At the same time, the company’s core social networking apps — including Instagram, WhatsApp, and Messenger — face challenges. New user growth has slowed and competition from rivals like TikTok, the Chinese video site, is increasing.
In a statement Wednesday, Mr. Zuckerberg said he stands by the Metaverse plan. “We remain confident in the long-term opportunities and growth that our product roadmap will unlock,” he said.
Meta’s main business was also digital advertising hurt by Apple’s decision to allow iPhone users to opt out of apps that track their online activity. This change impacted Meta’s ability to target ads to people on iPhones. Google has also discussed rolling out similar privacy changes for its mobile products, which could further impact Meta’s ad business.
In March, Russia banned Facebook and Instagram following its invasion of Ukraine, resulting in losses of tens of millions of users, analysts said. Earlier, Facebook announced that it would start labeling state-supported Russian media and relaxing hate speech policies for Ukrainian users.
“Meta faces Category 5 hurricane headwinds, from engagement to promotion to growth,” said Dan Ives, analyst at Wedbush Securities. “It feels like the company still hasn’t gone through all the changes with the iPhone or with the loss of users.”