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Sheryl Sandberg

Facebook Parent Meta Posts First Revenue Decline In History

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By Associated Press
July 27, 2022

The company is down 36% from $10.39 billion, or $3.61 per share, in the same period a year ago.

Facebook and Instagram’s parent company Meta posted its first revenue decline in history Thursday, dragged by a drop in ad spending as the economy falters — and as competition from rival TikTok intensifies.

The company’s stock dropped slightly in after-hours trading following the results, suggesting Wall Street was largely expecting the weak earnings report.

The results also largely followed a broader decline in the digital advertising market that is dinging rivals such as Alphabet and Snap. Google’s parent company reported its slowest quarterly growth in two years on Tuesday.

Meta also faces some unique challenges, including the looming departure of its chief operating officer Sheryl Sandberg, the chief architect of the company’s massive advertising business.

In addition to TikTok, the decline in ad spending among the downturn and Apple’s privacy changes, “questions about Meta’s leadership” — including Sandberg’s exit and negative sentiment about the company as a whole — also contributed to the decline, said Raj Shah, a managing partner at digital consultancy Publicis Sapient.

Meta earned profits of $6.69 billion, or $2.46 per share, in the April-June period. That’s down 36% from $10.39 billion, or $3.61 per share, in the same period a year ago.

Revenue was $28.82 billion, down 1% from $29.08 billion a year earlier.

Analysts, on average, were expecting earnings of $2.54 per share on revenue of $28.91 billion, according to a poll by FactSet.

“The year-over-year drop in quarterly revenue signifies just how quickly Meta’s business has deteriorated,” said Insider Intelligence analyst Debra Aho Williamson in an email. “Prior to these results, we had forecasted that Meta’s worldwide ad revenue would increase 12.4% this year, to nearly $130 billion. Now, it’s unlikely to reach that figure.”

She added that the good news — if it could be called that — is that Meta’s competitors are also experiencing slowdowns.

Meta is in the midst of a corporate transformation that will take years to complete. It wants to evolve from social media to the “metaverse” — a risky bet that’s still in its nascent stage. The metaverse is sort of the internet brought to life, or at least rendered in 3D. CEO Mark Zuckerberg has described it as a “virtual environment” in which you can immerse yourself instead of just staring at a screen. The company is investing billions on its metaverse plans that will likely take years to pay off — and as part of its plan renamed itself Meta last fall.

“Expect Meta’s decline to continue until Meta can monetize the metaverse, and begin another Meta-reverse,” Shah said.

Meta’s forecast revenue of $26 billion to $28.5 billion for the current quarter, which is below Wall Street’s expectations.

“This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty,” finance chief David Wehner said in a statement. Meta said Wehner is being promoted to chief strategy officer, where he will oversee the company’s strategy and corporate development. Susan Li, currently vice president of finance, will replace him as CFO.

Shares of Meta Platforms Inc. fell 58 cents to $169 in after-hours trading.

Additional reporting by The Associated Press.

: newsy.com

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As Midterms Loom, Mark Zuckerberg Shifts Focus Away From Elections

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Mark Zuckerberg, Facebook’s chief executive, made securing the 2020 U.S. election a top priority. He met regularly with an election team, which included more than 300 people from across his company, to prevent misinformation from spreading on the social network. He asked civil rights leaders for advice on upholding voter rights.

The core election team at Facebook, which was renamed Meta last year, has since been dispersed. Roughly 60 people are now focused primarily on elections, while others split their time on other projects. They meet with another executive, not Mr. Zuckerberg. And the chief executive has not talked recently with civil rights groups, even as some have asked him to pay more attention to the midterm elections in November.

Safeguarding elections is no longer Mr. Zuckerberg’s top concern, said four Meta employees with knowledge of the situation. Instead, he is focused on transforming his company into a provider of the immersive world of the metaverse, which he sees as the next frontier of growth, said the people, who were not authorized to speak publicly.

hearings on the Jan. 6 Capitol riot have underlined how precarious elections can be. And dozens of political candidates are running this November on the false premise that former President Donald J. Trump was robbed of the 2020 election, with social media platforms continuing to be a key way to reach American voters.

2000 Mules,” a film that falsely claims the 2020 election was stolen from Mr. Trump, was widely shared on Facebook and Instagram, garnering more than 430,000 interactions, according to an analysis by The New York Times. In posts about the film, commenters said they expected election fraud this year and warned against using mail-in voting and electronic voting machines.

$44 billion sale to Elon Musk, three employees with knowledge of the situation said. Mr. Musk has suggested that he wants fewer rules about what can and cannot be posted on the service.

barred Mr. Trump from its platforms after the riot at the U.S. Capitol on Jan. 6, 2021, has worked over the years to limit political falsehoods on its sites. Tom Reynolds, a Meta spokesman, said the company had “taken a comprehensive approach to how elections play out on our platforms since before the U.S. 2020 elections and through the dozens of global elections since then.”

recently raised doubts about the country’s electoral process. Latvia, Bosnia and Slovenia are also holding elections in October.

“People in the U.S. are almost certainly getting the Rolls-Royce treatment when it comes to any integrity on any platform, especially for U.S. elections,” said Sahar Massachi, the executive director of the think tank Integrity Institute and a former Facebook employee. “And so however bad it is here, think about how much worse it is everywhere else.”

Facebook’s role in potentially distorting elections became evident after 2016, when Russian operatives used the site to spread inflammatory content and divide American voters in the U.S. presidential election. In 2018, Mr. Zuckerberg testified before Congress that election security was his top priority.

banning QAnon conspiracy theory posts and groups in October 2020.

Around the same time, Mr. Zuckerberg and his wife, Priscilla Chan, donated $400 million to local governments to fund poll workers, pay for rental fees for polling places, provide personal protective equipment and cover other administrative costs.

The week before the November 2020 election, Meta also froze all political advertising to limit the spread of falsehoods.

But while there were successes — the company kept foreign election interference off the platform — it struggled with how to handle Mr. Trump, who used his Facebook account to amplify false claims of voter fraud. After the Jan. 6 riot, Facebook barred Mr. Trump from posting. He is eligible for reinstatement in January.

Frances Haugen, a Facebook employee turned whistle-blower, filed complaints with the Securities and Exchange Commission accusing the company of removing election safety features too soon after the 2020 election. Facebook made growth and engagement its priorities over security, she said.

fully realized digital world that exists beyond the one in which we live. It was coined by Neal Stephenson in his 1992 novel “Snow Crash,” and the concept was further explored by Ernest Cline in his novel “Ready Player One.”

Mr. Zuckerberg no longer meets weekly with those focused on election security, said the four employees, though he receives their reports. Instead, they meet with Nick Clegg, Meta’s president of global affairs.

Several civil right groups said they had noticed Meta’s shift in priorities. Mr. Zuckerberg isn’t involved in discussions with them as he once was, nor are other top Meta executives, they said.

“I’m concerned,” said Derrick Johnson, president of the National Association for the Advancement of Colored People, who talked with Mr. Zuckerberg and Sheryl Sandberg, Meta’s chief operating officer, ahead of the 2020 election. “It appears to be out of sight, out of mind.” (Ms. Sandberg has announced that she will leave Meta this fall.)

wrote a letter to Mr. Zuckerberg and the chief executives of YouTube, Twitter, Snap and other platforms. They called for them to take down posts about the lie that Mr. Trump won the 2020 election and to slow the spread of election misinformation before the midterms.

Yosef Getachew, a director at the nonprofit public advocacy organization Common Cause, whose group studied 2020 election misinformation on social media, said the companies had not responded.

“The Big Lie is front and center in the midterms with so many candidates using it to pre-emptively declare that the 2022 election will be stolen,” he said, pointing to recent tweets from politicians in Michigan and Arizona who falsely said dead people cast votes for Democrats. “Now is not the time to stop enforcing against the Big Lie.”

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Sheryl Sandberg Steps Down From Facebook’s Parent Company, Meta

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Ms. Sandberg flirted with leaving Facebook. In 2016, she told colleagues that if Hillary Clinton, the Democratic presidential nominee, won the White House she would most likely assume a job in Washington, three people who spoke to her about the move at the time said. In 2018, after revelations about Cambridge Analytica and Russia’s interference in the 2016 U.S. presidential election, she again told colleagues that she was considering leaving but did not want to do so when the company was in crisis.

Last year, Mr. Zuckerberg said his company was making a new bet and was going all in on the metaverse, which he called “the successor to the mobile internet.” In his announcement, Ms. Sandberg made only a cameo, while other executives were more prominently featured.

As Mr. Zuckerberg overhauled the company to focus on the metaverse, some of Ms. Sandberg’s responsibilities were spread among other executives. Nick Clegg, the president of global affairs and a former British deputy prime minister, became the company’s chief spokesman, a role that Ms. Sandberg had once taken. In February, Mr. Clegg was promoted to president of global affairs for Meta.

Ms. Sandberg’s profile dimmed. She concentrated on building the ads business and growing the number of small businesses on Facebook.

She was also focused on personal matters. Dave Goldberg, her husband, had died unexpectedly in 2015. (Ms. Sandberg’s second book, “Option B,” was about dealing with grief.) She later met Mr. Bernthal, and he and his three children moved to her Silicon Valley home from Southern California during the pandemic. Ms. Sandberg, who had two children with Mr. Goldberg, was focused on integrating the families and planning for her summer wedding, a person close to her said.

Meta’s transition to the metaverse has not been easy. The company has spent heavily on metaverse products while its advertising business has stumbled, partly because privacy changes made by Apple have hurt targeted advertising. In February, Meta’s market value plunged more than $230 billion, its biggest one-day wipeout, after it reported financial results that showed it was struggling to make the leap to the metaverse.

In the interview, Ms. Sandberg said Meta faced near-term challenges but would weather the storm, as it had during past challenges. “When we went public, we had no mobile ads,” Ms. Sandberg said, citing the company’s rapid transition from desktop computers to smartphones last decade. “We have done this before.”

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