Looks like we’ve entered an “economic downturn”

Meta Platforms CEO Mark Zuckerberg speaking at Georgetown University in Washington DC. 17, 2019.

Andrew Caballero-Reynolds | AFP | Getty Images

Platform Meta CEO Mark Zuckerberg said Wednesday at the company’s second-quarter earnings report that the economy appears to be in a downturn that will hurt digital advertising, so Facebook’s parent company needs to do more with less.

The comments come after Meta, which operates the ad-dependent social networks Facebook and Instagram, disclosed second-quarter earnings and earnings data. fell below analysts’ estimates. Rivals on social media Click as well as Twitter informed below expected quarterly results last week

“Facebook engagement trends have generally been stronger than we expected, and Reels’ strong growth continues to drive engagement across Facebook and Instagram,” Zuckerberg said on a conference call with analysts. “However, we seem to have entered an economic downturn that will have a big impact on the digital advertising business. It is always difficult to predict how deep or how long these cycles will be, but I would say that the situation looks worse than it was a quarter ago.”

Earlier Wednesday, the US Federal Reserve raised the base rate at 75 basis points, and Fed Chairman Jerome Powell said that consumer spending growth has slowed significantly. But he said he didn’t believe the US was in a recession right now, and the National Bureau of Economic Research hadn’t ruled on the timing of a possible recession.

That didn’t stop Google’s parent Meta Alphabet and other tech companies from cutting hiring plans.

“This period requires more intensity, and I expect that we can do more with less resources,” Zuckerberg said.

In May, the company told the media that it was reducing its headcount growth rate. In a conference call on Wednesday, Zuckerberg elaborated.

“Our plan is to steadily reduce headcount growth over the next year,” he said. Many teams will be downsizing so we can redirect energy to other areas within the company, and I want to empower our leaders to decide in their teams where to redouble efforts, where to offset attrition, and where to restructure teams.”

Sheryl Sandberg, Facebooks outgoing COOsaid in a call on Wednesday that Russia’s invasion of Ukraine and the normalization of e-commerce since the explosion during Covid continue to hold back the company’s growth, with inflation and recession uncertainty exacerbating the difficulty.

“Despite the current challenges, I am very confident in the long term,” Sandberg said. “We are facing a cyclical downturn, but in the long term, the digital advertising market will continue to grow. Advertisers will go where they get the best return on investment and the opportunity to run their business. We believe that we will continue to show very good results. compared to other advertising options.

The difficult economic climate is factoring into Meta’s third-quarter guidance, said David Wehner, chief executive of the company. outgoing chief financial officer.

Meta shares fell 4% hours after the call.

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