Yesterday, Facebook/Meta reported its first-ever quarterly revenue drop. While the company highlighted challenges faced by US companies as well as worries of recession, Wall Street analysts believe TikTok’s competition and Apple’s privacy changes are a concern for the company in the near term.
“Tough comps, macro and FX are certainly part of the near-term story, but TikTok competition and Apple iOS changes will both have a bigger impact than expected in 2022,” J.P. Morgan analysts said.
According to Reuters, “many analysts expect Meta/Facebook could return to stronger growth in 2023, but noted the sputtering start to its metaverse dream, as regulators clamp down on big tech firms.”
The publication also highlights the Apple App Tracking Transparency policy, which changed the ad industry a couple of years ago.
In a report by Lotame, covered by 9to5Mac in April, big tech platforms’ revenue could drop by almost $16 billion due to Apple’s App Tracking Transparency.
ATT requires that applications ask permission from users before tracking them across other apps and websites. For example, when you open the Facebook app, you’ll see a prompt that says the app would like to track you across other apps and services. There will be two options from which to choose: “Ask App not to Track” or “Allow.”
At the time, Lotame’s report showed that Zuckerberg’s company would take the biggest hit as the privacy changes would cost it $12.8 billion in revenue.
“The effects of these changes on these companies are hard to isolate because all four players are still growing extremely strongly, still taking share from the last bastions of traditional media and gaining share in digital media as privacy regulations make it harder and harder for independent publishers and technologies to execute,” said Mike Woosley, Chief Operating Officer at Lotame. “To add to the complexity, the pandemic has introduced volatile and unpredictable gyrations in the pacing of media spend.”
A few months later, Facebook is now reporting its first quarterly revenue drop with at least 10 brokerages cutting their price targets on Meta. Revenue slipped 1% from a year ago to $28.8 billion.
In addition, although Facebook is trying to push its video initiative with Reels and focus on this kind of content across its apps, Reuters reports that the company’s executives said “it will be a headwind in the short term before eventually boosting income” with the function.
With all that in mind, it seems Facebook will have a revenue increase somewhere in the future, but it will have to do more to maintain its reign.
Related:
FTC: We use income earning auto affiliate links. More.
Comments