Jackpot for Meta. The parent company of Facebook, Instagram and WhatsApp doubled its profit year-on-year in the first quarter, bringing in $12.4 billion. A result for the American giant which exceeds forecasts by several billion dollars. Its quarterly turnover increased by more than a quarter, to stand at $36.5 billion.
An improvement that Meta owes largely to the success of its advertising activity. “In full swing,” assures Max Willens of the eMarketer research office. The result of a paid strategy: more advertising space available for sale and an upwardly revised average price. Enough to “generate enviable margins”, notes the specialist.
Retain advertisers
By the end of the year, Meta could also start selling advertising on Threads, its written message platform similar to X (formerly Twitter), attached to Instagram. An initiative that would please “advertisers who want to communicate in real time with their audience and who will finally have a viable alternative to X”, noted Mike Proulx, vice-president of the Forrester firm.
Another secret ingredient of Meta: “Reels”, present on Instagram. A format plagiarized from its Chinese competitor TikTok, in turmoil since the promulgation of a text threatening to ban the application in the United States. Like on TikTok, these short, entertaining scrolling videos encourage users to stay on the social network as long as possible. This is called “scrolling”. The European Commissioner, Thierry Breton, sounded the alarm about the “risk of addiction” posed by this practice.
These investments that shake Wall Street
If Meta succeeds in doing well after a difficult year in 2022, the markets are worried about its recent announcements: the Silicon Valley company unveiled this Wednesday, April 24, the investments allocated to the development of intelligence artificial (AI) this year: between 35 and 40 billion dollars. It’s more than expected.
To defend his investment, Mark Zuckerberg assured that the first returns on his generative artificial intelligence (AI) assistant Llama 3 were very positive, and encouraged him to invest more in order to “stay at the cutting edge” and make Meta AI “the best and most used AI assistant in the world”. “I believe that we have gained in optimism and ambition on AI,” Mark Zuckerberg tried to explain during the conference for analysts. “We are at a point where we are showing that we can build cutting-edge models and become the world’s leading AI company.” While admitting that this could take “several years”.
Too long for Wall Street. The words of the Meta boss also failed to reassure the stock market: after the close of the New York Stock Exchange, the Californian group’s shares fell by more than 16%. “Investors did not appreciate the weaker than expected revenue forecast for the current quarter and even less the announcement that the company will spend more money to improve its artificial intelligence capabilities,” underlines Ipek Ozkardeskaya, analyst at Swissquote Bank. Especially since these are “sectors which may not contribute to profits for several years”.
But the clock is ticking. And Mark Zuckerberg seems to have one obsession in mind: catching up with Meta on Google and Microsoft in the frantic race for generative AI (production of texts, images and other content, upon simple request in everyday language, Editor’s note). Debra Williamson of Sonata Insights adds nuance, highlighting an advantage of the Californian firm over its competitors: “thanks to its platforms, Meta has a massive user base for testing AI experiences […] and quickly assess those towards which its users gravitate.