Meta to keep facing Apple privacy pinch, TikTok heat for now

Reels, a short video product that Meta is increasingly inserting into users' feeds to compete with TikTok, cannibalizes more profitable content and will be a headwind in the short term before eventually boosting income, company executives said. Many analysts also expect Meta could return to stronger growth in 2023, but noted that the sputtering start to its metaverse dream, as regulators clamp down on big tech firms, would set back its innovation plans.


Reuters | Updated: 28-07-2022 22:05 IST | Created: 28-07-2022 22:04 IST
Meta to keep facing Apple privacy pinch, TikTok heat for now
Representative image Image Credit: Wikimedia

Stiff competition from TikTok and Apple Inc's privacy changes will remain a cause for concern for Facebook-owner Meta Platforms Inc in the near term, Wall Street analysts said. At least 16 brokerages cut their price targets on Meta after the company reported its first-ever quarterly revenue drop on Wednesday, highlighting challenges faced by U.S. companies from a stronger dollar and worries of an impending recession.

Shares of the company were down about 6% at $159.8, setting the Whatsapp owner on course to lose roughly $30 billion in market value for the day. Last year, Meta's valuation hit the trillion-dollar mark and ended the year at more than $900 billion.

Apple upended the digital ad industry when it introduced new iPhone privacy controls last year that made it harder for companies such as Meta and Snap Inc to target and measure ads on their apps. That, coupled with TikTok's aggressive growth, is worsening recessionary fears, according to analysts.

"Tough comps, macro and FX are certainly part of the near-term story, but TikTok competition and Apple iOS changes will both have a bigger impact than expected in 2022," J.P. Morgan analysts said. Reels, a short video product that Meta is increasingly inserting into users' feeds to compete with TikTok, cannibalizes more profitable content and will be a headwind in the short term before eventually boosting income, company executives said.

Many analysts also expect Meta could return to stronger growth in 2023, but noted that the sputtering start to its metaverse dream, as regulators clamp down on big tech firms, would set back its innovation plans. Also weighing on Meta's shares was the U.S. Federal Trade Commission seeking a court order to block the company from buying virtual reality content maker Within Unlimited.

 

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Give Feedback