Mark Zuckerberg, the founder of Facebook, has put the future of his company on the line on an immersive online world known as the metaverse† On Wednesday, the company showed that it was still working on that transformation.
Meta, the company formerly known as Facebook, reported profit of $7.5 billion for the first quarter, down 21 percent from a year earlier. Revenue rose 7 percent to $27.9 billion. Wall Street analysts had forecast earnings of $7.1 billion on revenue of $28.2 billion.
The results followed metas gloomy financial report in February, as the company also posted declining profits and slowing user growth. The next day, Meta’s stock plunged 26 percent and its market value plunged more than $230 billion in the largest one-day wipeout ever.
The two quarters marked the company’s first consecutive earnings declines in more than a decade, a sign of the difficulties it faces in changing course. Although Meta spends a lot of money on metaverse-related products such as virtual reality glasses, it is far from certain whether people want to buy such gadgets. At the same time, the company’s main social networking apps, including Instagram, WhatsApp and Messenger, are facing challenges. New user growth has slowed and competition from rivals such as the Chinese-owned video site TikTok is increasing.
In a statement on Wednesday, Mr. Zuckerberg said he was sticking to the metaverse plan. “We remain confident in the long-term opportunities and growth that our product roadmap will unlock,” he said.
Meta’s main digital advertising activity was: hurt by Apple’s decision to let iPhone users restrict apps from tracking their online activities. That change has impacted Meta’s ability to target ads to people on iPhones. Google has also discussed introducing similar privacy changes to its mobile products, which could further affect Meta’s advertising activities.
In March, Russia banned Facebook and Instagram after its invasion of Ukraine, leading to the loss of tens of millions of users, analysts said. Facebook had announced it would start labeling Russian state-sponsored media and easing hate-mongering policies for Ukrainian users.
“Meta is facing Category 5 hurricane headwinds from engagement to advertising to growth,” said Daniel Ives, analyst at Wedbush Securities. “There’s a sense that the company still doesn’t have the arms to deal with all the changes with the iPhone or losing users.”
On Wednesday, Meta reported that the number of users in its family of apps was up 6 percent from a year earlier and up slightly from the previous quarter. On Facebook, the number of active users in the first quarter rose from 1.93 billion in the previous quarter to 1.96 billion per day.
In February, Meta announced that the main Facebook app had lost about half a million users for the fourth quarter of the previous quarter. It was the first such decline in the company’s history.
Meta’s shares, which finished regular trading at $174.95, rose more than 17 percent in after-hours trading.