Facebook owner Meta has reported its first ever revenue drop amid lower advertising sales and growing competition from TikTok.
The social media giant reported revenue of $28.8bn in the three months to June, down almost 1% from $29.08bn the previous year.
The figure was lower than the $28.9bn expected by Wall Street, sending Meta shares falling by about 5% in extended trading.
The company, which also owns Instagram and WhatsApp, earned profits of $6.69bn, or $2.46 per share, during the quarter – a 36% plunge compared with the same period a year ago, when profits were $10.39bn, or $3.61 per share.
Meta issued a muted forecast for the next quarter – from July to September – with revenue expected to be in the range of $26bn and $28.5bn.
This is lower than the $30.5bn analysts had expected.
Meta shares have lost about half their value since the beginning of the year, reflecting investors’ concerns about its advertising business.
Apple’s iOS privacy update last year limited Meta’s ability to track and target users, while rising inflation has led some companies to cut back on their ad budgets.
Meta’s rivals Snap and Twitter also reported disappointing results last week, citing similar challenges.
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The metaverse is proving to be a costly venture for Meta so far. Its Reality Labs business unit, which is responsible for developing the metaverse, recorded a $2.8bn loss in its second quarter, despite $452m in sales.
This part of the company is expected to generate less money in the next quarter.
Facebook saw a 3% increase in its daily active users in the past year, reaching 1.97bn in June.