Arab Press

بالشعب و للشعب
Saturday, Aug 02, 2025

Meta investors brace for a difficult quarter after stocks nosedive

Meta investors brace for a difficult quarter after stocks nosedive

After losing a record $230bn in market value due to a disappointing earnings report in February, analysts are hoping to see progress
Meta experienced a historic nosedive in value earlier this year amid a major rebrand and shake-ups to its business model – and investors are bracing for another difficult quarter.

Meta lost a record $230bn in market value after a disappointing earnings report in February, in which it revealed Facebook had recorded its first-ever drop in daily user numbers.

While investors will be eagerly watching Meta’s first quarter report on Wednesday for signs of recovery, a “full turnaround is not expected”, said Debra Williamson, principal analyst at market research firm Insider Intelligence.

“It is going to be slow progress for Meta after its massive stock decline last quarter,” she said. “But we – and advertisers in particular – are hoping to see some progress.”

Meta’s struggle was not completely unexpected: chief executive officer Mark Zuckerberg had warned that new privacy rules from Apple could cost the company $10bn in lost sales this year. The regulations prevent Meta from collecting certain user data and have prompted the company to shift some of its core advertising business models.

One such shift is placing substantial emphasis on Reels, its shortform video content that it has yet struggled to monetize. The company warned in last quarter’s report that year-over-year growth could continue to be affected in the first quarter of 2022 by these issues.

“We expect continued headwinds from both increased competition for people’s time and a shift of engagement within our apps towards video surfaces like Reels, which monetize at lower rates than Feed and Stories,” said the CFO, David Wehner, in a guidance statement.

Meta’s pivot to video represents an effort to retain young users – a key advertising demographic that has been leaving Facebook and Instagram in droves. The age group provides 97% of Meta’s revenue, documents leaked by the company whistleblower Frances Haugen have shown, but is being lured to competitors like TikTok.

Meta has a “formidable competitor in TikTok”, said Williamson, and has yet to create a sustainable business model in response. “They said last quarter they were going to figure out how to better monetize Reels,” she said. “This quarter, we are looking for signs that is actually happening.”

Meanwhile, the company’s proprietary virtual reality platform, the Metaverse, is sucking away large amounts of funding from core businesses such as Facebook and Instagram. Meta funneled $10bn in funding into the platform in 2021 alone – more than 10 times what it paid to acquire Instagram in 2012.

The Metaverse faces a long road to profitability, said Raj Shah, an analyst at consultancy firm Publicis Sapient. Successful monetization often requires a critical mass of users – Facebook, for example, has nearly 3 billion. But its Metaverse brand Horizon World currently has just 30,000 worldwide.

“We see no reason to believe that this quarter for Meta will be significantly different than last,” he said. “Meta has announced new monetization schemes for its Metaverse investments, but adoption is still low.”

User numbers are critical to Meta’s success – and a historic loss in users on its Facebook platform was one of the most impactful takeaways from its 2021 fourth quarter report. That loss underscored that Meta’s biggest short-term challenge is to stem the decline in usage, Williamson said.

“This was a wake-up call to the market and also to the advertising community that this is a platform that is flattening – it is not the sexy, bright shiny object any more,” she said.

User numbers will probably be further hit by bans of Meta products in Russia – where it hosted millions of users – amid its ongoing war with Ukraine, said Martin Garner, COO at market research firm CCS Insight. The country blocked Facebook and Instagram in March, citing Meta as an “extremist organization”.

“With next week’s results we expect Meta to continue its run of challenging quarters,” he said.
Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
AI Raises Alarms Over Long-Term Job Security
Russia Formally Recognizes Taliban Government in Afghanistan
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Mediators Edge Closer to Israel-Hamas Ceasefire Agreement
Germany Seeks Taliban Deal to Deport Afghan Migrants
Emirates Airline Expands Market Share with New $20 Million Campaign
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
Qatar Airways Clears Backlog of Passengers Following Missile Threats
Iran's Parliament Votes to Suspend Cooperation with Nuclear Watchdog
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Oman Set to Introduce Personal Income Tax, First in Gulf
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
G7 Leaders Fail to Reach Consensus on Key Global Issues
Mass exodus in Tehran as millions try to flee following Trump’s evacuation order
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
×