Facebook parent Meta on Wednesday reported that its revenue declined for a second consecutive quarter, hurt by falling advertising revenue amid competition from the wildly popular video app TikTok.
The quarter's weak results raised fresh questions about whether Meta's plans to spend $10 billion a year on the metaverse — a concept that doesn’t quite exist yet and possibly never will — is prudent.
Meta's disappointing results followed weak earnings reports from Google parent Alphabet Inc. and Microsoft this week. The Menlo Park, California, company earned $4.4 billion, or $1.64 per share, in the three month period that ended Sept. 30. That’s down 52% from, $9.19 billion, or $3.22 per share, in the same period a year earlier.
Analysts were expecting a profit of $1.90 per share, on average, according to FactSet.
Revenue fell 4% to $27.71 billion from $29.01 billion, slightly higher than the $27.4 billion that analysts had predicted.
Meta's stock tumbled 14% in after-hours trading.
Some of the company's investors are concerned Meta is spending too much money and confusing people with its focus on the metaverse, a virtual, mixed and augmented reality concept that few people understand — while it also grapples with a weakening advertising business.
“Meta has drifted into the land of excess — too many people, too many ideas, too little urgency,” wrote Brad Gerstner, the CEO of Meta shareholder Altimeter Capital, earlier this week in a letter to Meta CEO Mark Zuckerberg. “This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”
Meta also forecast weaker-than-expected revenue for the current quarter, further raising worries that the revenue decline is more of a trend than an aberration.