The stock of Instagram's parent Meta is in decline Facts: 1) | The Econgram

The stock of Instagram's parent Meta is in decline

Facts:
1) Meta declared a quarterly revenue* of $27.7 billion, which is 4% less compared to the previous year. Besides, a 1% loss in revenues was reported last quarter.
2) Meta’s department responsible for virtual reality and metaverse reported a 49% fall in revenues from the previous year.
3) Hence, yesterday Meta’s shares dropped by 5%. Now the stock’s price is as low as it was in 2017.
4) Advertising constitutes 98.2% of the total revenue of Meta.

Analysis:
The downturn of Meta could be explained by adverse macroeconomic conditions, rivalry with TikTok, and Apple’s ad-tracking update:
1) The war in Ukraine caused inflation and an ad-spending downturn, pushing Meta’s revenues down.
2) TikTok claims Meta’s users’ attention.
3) Last year Apple introduced requirements that oblige applications to ask for the user’s permission to track their data. This data is used by Meta to place the ads that target the users’ interests. Many people did not permit to track their digital footprint*, so the ad-efficiency fell, leading to the company’s revenue contractions.

Inspired by WSJ