Social networks: Facebook user growth makes the stock market breathe again – science

Menlo Park (Dpa) – The number of users of the Facebook Meta group grew significantly again at the beginning of the year after a collapse in late 2021. In the first quarter of this year, 1.96 billion users log in to Facebook every day, about 30 million more than three months ago. Investors were relieved: Meta stock jumped more than 18 percent in after-hour trading.

In the previous quarter, the daily number of users had dropped by one million to 1.929 billion for the first time. Despite the small decline, this was interpreted as a red flag. At the time, Meta admitted the increased competition from the Tiktok short video app as a key reason. The stock then lost a quarter of its value in one day and then dropped further.

Now founder and boss Mark Zuckerberg wanted to highlight the success of the internal copy of Tiktok Reels. For example, on Meta’s Instagram app, users watched Reels’ videos a fifth of the time, he said in a conference call with analysts Wednesday. On Facebook, videos account for half of the usage time, and Reels has seen growth as well. However, Meta is still working on an advertising format for this.

Use of artificial intelligence on multiple platforms

Tiktok became popular with the idea of ​​allowing the software to select short videos for users based on their interests. Among other things, algorithms pay attention to how long you stay with a video before continuing to scroll.

Zuckerberg now wants to use that artificial intelligence not just for customizing short videos. He should recommend all types of content on Meta’s different platforms to users, he said. “I think in the future people will use more and more AI-based discovery machines to entertain them, teach them things and connect them with people with similar interests.”

Late last year, Zuckerberg announced the focus on a future digital world – the Metaverse – and then changed the company name from Facebook to Meta. He has now pointed out that previous services like Facebook and Instagram should have made enough money to fund the development of the new platform.

Meta’s Reality Labs division takes care of this, which also hosts the business of glasses for viewing virtual reality. Thanks to these devices, Reality Labs achieved sales of $ 695 million last quarter. At the same time, they recorded an operating loss of $ 2.96 billion due to the expensive Metaverse development.

Profit falls by one fifth

Overall, things are not going as well for the group as they once were. Revenue grew in the first quarter year-on-year by just 7% to $ 27.9 billion. This is a very low increase for the group – and Meta has missed analysts’ expectations. The bottom line is that profits fell a good fifth to $ 7.465 billion.

For the current quarter, Meta announced sales of between $ 28 and $ 30 billion. With a value of $ 29 billion from the previous year, there could also be a drop in sales. Among other things, the group refers to the weakening of business due to the Russian aggressive war against Ukraine. This is due not only to the disruption of the advertising platform in Russia, but also to the fact that concerns about the economic consequences of the war are slowing down the overall activity of advertising clients.

Instagram and Facebook blocked in Russia

Russian authorities had imposed a ban on Facebook and Instagram due to “extremist activity” in the country. They stressed that Meta tolerates calls for violence against the Russian occupation forces in Ukraine. Technically, the Russians can get around the block with tools like VPN tunnels. However, Meta predicts that the number of monthly active users in Europe will decrease in the current quarter due to the loss of many users in Russia. CFO Dave Wehner said this could also lead to a drop in the number of users around the world.

At least one metagroup app, including WhatsApp and Instagram, was recently used by 2.87 billion users every day. In the previous three months it was 2.82 billion.

The group also announced that it will cut costs this year. So far, spending has been estimated at between $ 90 and $ 95 billion. Meta now expects a range of $ 87 billion to $ 92 billion.

© dpa-infocom, dpa: 220427-99-71403 / 3

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