Ahead of tomorrow’s second-quarter earnings results, Meta Platforms Inc (NASDAQ:FB), formerly Facebook, may have a mega problem on its hand.
Socialite Kylie Jenner posted on her Instagram story a post that said “make Instagram Instagram again.”
The last time the celebrity complained about a social media site, Snapchat had US$1.3bn wiped from its value, so Meta, which owns Instagram, could be staring down the barrel at a similar situation.
A more direct link would be Snap’s profit warning last week after revenue growth was below revised guidance in May, while losses also doubled.
Many of the issues that Snap faced centred around the digital advertising market struggling to cope with the economic downturn as well as changes to user tracking introduced by Apple hitting social media sites.
In the year so far, the company has already cut its hiring plans by at least 30%, with chief executive Mark Zuckerberg warning his staff to prepare for a deep economic downturn.
Meta will hire around 7,000 engineers this year, down from the original 10,000.
The social media behemoth, which also owns WhatsApp, expects a leaner second half of the year as it contends with macroeconomic pressures and data privacy threats to its advertising business.
First quarter results, however, were stronger than expected, driven by an increase in users across the platform, even reporting growth in total revenue compared to the same period for the year before.
Something investors will be looking out for is the performance of its Metaverse branch.
Last year’s name change signalled an intent to become a virtual and meta-world business as opposed to a social media firm.
However, Zuckerberg and other top executives have warned on numerous occasions that side of the business will not be cash generative for some times it invests large amounts into research and development.
If tonight's results still show the company is some way of becoming cash generative, then another jump in users across its social media apps will be needed to aid the share price which is down 50% in the year so far.