For Mark Zuckerberg, the first three quarters of last year were bad. In July 2022 his social-media empire, Meta, announced its first ever year-over-year decline in quarterly revenue. Three months later it did another report. Investors scoffed at the costly pivot from a lucrative advertising business to the untapped realm of the metaverse, on which Mr. Zuckerberg was spending $10 billion a year. By November the meta had lost nearly three-fifths of its market value from its peak of $1.1 trillion in August 2021, when the COVID-19 pandemic meant much of daily life was being lived online. Shortly afterwards he sacked 11,000 people, or 13% of its workforce. All the while, he’s been defending Trustbusters and TikTok, a rival that has proven to be vastly more adept at attracting eyeballs than previous challengers like Snap or Pinterest — and advertising dollars with them.
On February 1 Mr Zuckerberg predicted another 4.5% year-on-year sales decline in the last three months of 2022. But the decline was less than expected. The company has also put out an optimistic forecast for the current quarter, in which it expects revenue to reach $28.5 billion. That’s more than it would have been in the first three months of 2021, before Apple introduced privacy rules for its iDevices that made it significantly more difficult for advertisers to track users across the Internet. Costs are coming under control, Mr Zuckerberg promised, and the company will be “more proactive about cutting projects that are not performing or may no longer be as important”. share. To top it off, the same day a judge in California dismissed a lawsuit brought by the Federal Trade Commission (FTC) to block its acquisition of Meta, maker of a popular virtual-reality fitness app.
Investors greeted it all with a big “like”. Meta’s share price, which had already risen more than 70% over the past three months, jumped 20% or more after hours. This will take its market capitalization to $484bn. Squint and company, once completely removed from the ranks of big tech, are back in the fold.
Can the hot streak last? Mr. Zuckerberg has reasons for cautious optimism. Meta has found ways to work around Apple’s privacy settings. Its artificial-intelligence capabilities are improving both in the lab and the real world—specifically, in the world of Reels, where the algorithms for serving up short videos on Facebook and Instagram are two of Meta’s profit motors. They are reportedly getting shrewd in making engagements. TikTok, which is owned by a Chinese company, has come under scrutiny in the US, where some politicians are calling for a ban on the popular app. Even Apple has backhandedly complimented Mr Zuckerberg’s vision of the metaverse by working on its own virtual-reality-like headset.
A lot could still be wrong. What used to be recession-proof digital-ad spend is becoming more cyclical, and the economic cycle is turning downward. Even if Meta’s western markets avoid recession, advertisers’ spending is likely to remain tight. Despite a degree of bipartisan support for a TikTok ban, the political impasse in Washington makes any actual legislation to that effect unlikely in the near future. Despite its courtroom victory, Meta still faces other serious challenges from regulators at home (where another FTC lawsuit calls for its break-up) and in Europe (where tough new rules are being imposed on large digital platforms). being finalised). And some people are burning to migrate to the Metaverse. Late last year, Horizon World, Meta’s main metaversal attraction, was reportedly losing users. Mr. Zuckerberg is not out of the woods. But he doesn’t seem lost in the woods anymore.
© 2023, The Economist Newspaper Limited. All rights reserved.
From The Economist, published under license. Original content can be found at www.economist.com
catch all corporate news And updates on Live Mint. download mint news app to receive daily market update & Live business News,