Meta reports revenue drop, cites uncertainty around recession
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Meta reported a decline in revenue as its ad business is impacted by economic uncertainty.
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Meta reports revenue drop, cites uncertainty around recession
Sales at Meta fell for the first time ever due to increasing inflation and marketers' fears of a recession, according to corporate management.
Following the Federal Reserve's fourth rate hike of the year earlier in the day, Chairman Jerome Powell dismissed talk of a recession, while the White House bluntly denied the US was in one.
However, the Fed's Atlanta branch recently assessed that the US could see two consecutive quarters of GDP drop, which many regards to be the technical definition of a recession.
"We seem to have entered an economic downturn that will have a broad impact on the digital advertising business. It's always hard to predict how deep or how long these cycles will be, but I'd say that the situation seems worse than it did a quarter ago," founder and CEO Mark Zuckerberg said during a quarterly earnings call on Wednesday.
Read next: Stocks fall as Facebook reports disappointing earnings
"In the last recession, we invested in our ads business through the downturn and came out stronger on the other side. And I'm focused on doing the same today."
In the same call, Meta COO Sheryl Sandberg stated that the company is focused on assisting clients in running efficient marketing campaigns in the face of these challenges.
"There are also new challenges with rising inflation and uncertainty around a looming recession," Sandberg said.
"We know that recessions put pressure on marketers to make sure their ad budgets are spent in the smartest way possible."
Read next: US before 'very narrow path' to avert recession: IMF
Meta reported in its second quarter report that revenue fell from $29 billion in the same period last year to $28.8 billion this year.
The company forecasts total revenue for the third quarter of this year to fall between $26-28.5 billion.
US Fed raises interest rates by 75 basis points
The United States Federal Reserve on Wednesday hiked interest rates in the country by 75 basis points, or 0.75%, in the fourth increase this year aimed at tackling surging inflation that impacted every sector in the US economy.
"The Committee decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2 percent and anticipates that ongoing increases in the target range will be appropriate," the central bank's Federal Open Market Committee (FOMC) said in a statement on its monthly rate decision for June.
After three increases of 75 basis points, 50 basis points, and 25 basis points, respectively, in June, May, and March, the Fed-determined benchmark US lending rate had previously been set at 1.5 to 1.75%.
