When the business releases its financial results on Wednesday, Meta's future may lay in the metaverse.
Meta Heads Bets Big On TikTok-Style Videos As Revenue Drops For The First Time Ever
As Zuckerberg wagers on videos similar to TikTok, Meta is headed for its first-ever revenue decline.
Although investors will be concentrating on two additional short-term bets when Meta releases its financial results on Wednesday—improving short-video service Reels to compete with TikTok and overhauling its advertising system in light of Apple's throttling of access to user data—the company's future may lie in the metaverse.
CEO Mark Zuckerberg told staff members on a call late last month that he thinks it will take time and that the business has to speed up the process. The conversation touched on essential topics that will be scrutinized when Meta releases its quarterly results on Wednesday.
According to IBES statistics from Refinitiv, Meta is anticipated to see its first sales decline as a public business, down 0.4% to around $29 billion.
In addition, investors are preparing for stagnant user growth, and the third quarter of profit decreases. They are keeping an eye out for indications of hardware project cancellations and slower hiring to control costs.
This year, the social media giant made significant updates to Facebook and Instagram, mimicking the style of competitor TikTok and its algorithmic suggestions of trending short videos.
After Apple's privacy restrictions from last year negatively impacted Meta's ad targeting capabilities, Meta is likewise making significant investments to rebuild its ad system upon its user data.
Reels provided a "great possibility" for Meta, according to Zuckerberg, who also highlighted that the format was "still only around 15% of the size of TikTok" during the call with staff on June 30.
Before we truly have a line of sight to having a solid leadership position, he added, "I think realistically we're looking at a year and a half, maybe even longer."
He said the reconstruction of the advertisements system took a comparable amount of time. To get through the period, he frequently urged the workers to boost their "intensity."
Despite having the most robust first-party user data in the market, Meta "has a lot of confidence to repair before investors can feel comfortable with sustaining its leading position in digital advertising
Zuckerberg informed staff that the economy had become worse since management originally planned the changes to Reels and advertisements and announced intentions to hasten the transitions so that income from the central business could finance Meta's long-term metaverse investments.
He added that we have to bring in as much of the business that may be three years, two years, or one and a half years away while also pushing for things like costs and cost increases.
In the short term, he continued, he preferred to "take more pain in terms of a little bit less profitability" than to reduce "financing for future stuff."
However, there has been some opposition to the revisions.
After experimenting with TikTok-like features, Instagram announced last week that it would push back its ambitions to replace the app's scrolling feed with a more immersive "Panavision"-style layout until early 2019.
The firm understands that "changes to the app can be an adjustment, and we want to take the time to make sure we get this right," according to a spokesman for Meta.
Kim Kardashian and Kylie Jenner, two of Instagram's most popular users, each tweeted a meme on Monday asking the company to "Make Instagram Instagram again."
The message stated, "Stop trying to be TikTok. I simply want to see lovely pictures of my pals." With sincere thanks to everyone, it ended.
According to Instagram CEO Adam Mosseri, the layout was "not yet excellent," and the business would need to "bring it to a nice position if we're going to ship it" to all Instagram users.
However, he went on to say that the business will keep doing testing and moving toward video.