Meta piles onto growing fears that advertising demand is plummeting, posting its first decline in revenue since going public
- Facebook-owner Meta piled onto fears of plunging demand in the advertising market.
- The company said slower advertising demand is driven by uncertainty in the economy as concerns of a recession loom.
Facebook-owner Meta piled onto fears of plunging demand in the advertising market, warning it expects to generate less revenue than expected next quarter.
The company announced Wednesday that weaker-than-expected advertising demand is being driven by broader uncertainty in the economy, as experts say the chances of a coming recession grow.
"We seem to have entered an economic downturn that will have a broad impact on the digital advertising business. It's always hard to predict how deep or how long these cycles will be, but I'd say that the situation seems worse than it did a quarter ago," Meta CEO Mark Zuckerberg told reporters and investors on Wednesday.
The social media giant is tightening its belt to cope with this more "challenging" environment, saying it expects to reduce hiring and overall expenses this year.
"Our plan is to steadily reduce headcount growth over the next year. Many teams are going to shrink so we can shift energy to other areas inside the company," Zuckerberg said.
Meta said its latest Q2 revenue fell year-over-year to $28.8 billion — its first such decline since the company went public a decade ago.
Even worse, Meta set expectations for Q3 revenue at $26 billion to $28.5 billion, well below Wall Street's current estimate of $30.4 billion.
Meta's stock fell 2.7% in recent after-hours trading on Wednesday.
The future stepback in spending comes after a big year for Meta. Over the last few months, the company officially changed its name from Facebook to Meta, reflecting its shift in focus to investing in the metaverse. One current employee recently told Insider that Meta's change in strategy is "fomenting disorganization and anxiety" inside the company.
Meta said it grew its number of employees to more than 83,000 - a 32% increase from June 2021, but Zuckerberg said that headcount should "continue to decline over time."
Meta told employees in May that it was enacting a hiring pause. One employee anonymously told Insider they worried that Meta might lay off as much as 10% of its employees this year.
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