2022 has been a miserable year for Meta. Year-on-year, the stock price fell 65%, he laid off 11,000 people, and employee morale plummeted.

However, there are signs that things are improving. Earlier this month, the company reported better-than-expected fourth-quarter earnings, and the stock is up more than 20% in his one day. Almost every other major tech company continues to struggle, laying off thousands of employees, but the stock market has never recovered anywhere near Meta.

According to an internal memo from one of the company’s chief executives obtained by Recode, this progress may have been exaggerated, and the company is not out of the woods just yet. Meta still faces major business challenges, including Apple’s restrictive advertising business, TikTok’s growing popularity, and brand sentiment with US users.

Meta declined to comment.

In a memo posted on Workplace, Meta’s internal employee message board, in early February, Meta’s chief marketing officer, Alex Schultz, warned employees to temper their excitement. “We must keep our eyes on the horizon, not on street reactions and stock prices,” he wrote. “I believe in this company…but we are still in the early stages of this turnaround and it’s not all going well.”

Schultz said Meta remains “an Apple whim,” citing new privacy features introduced by the iPhone maker in 2021, limiting the amount of data Meta can collect about many mobile users, and limiting the company’s ability to serve ads. You write that it makes targeting difficult. This is an important part of our business model. Last February, Meta said the change would cost the company $10 billion in annual revenue. Since Apple made the change, Facebook has been using AI to compensate for losses and improve ad targeting without Apple’s help. According to The Wall Street Journal, one approach is to “negotiate” users to agree to be tracked in exchange for seeing less ads. But those efforts are just the beginning, and Schultz’s memo reflects the continued power Apple still holds over Facebook and Instagram as the gatekeeper of the iPhone App Store.

Executives also tempered expectations for Reels, Meta’s TikTok clone, saying its “monetization efficiency,” or how much the company makes from Reels ads, is “still very low.” Overall, Reels is “still smaller than TikTok,” writes Schultz. Meta CEO Mark Zuckerberg said in November that users spend about half as much time on Reels as he does on TikTok outside of China.

Zuckerberg also said in a post on this month’s post-earnings conference call that there are more than 140 billion reel plays every day on Facebook and Instagram, up more than 50% from six months ago. However, advertising within Reels is not as profitable as advertising within Facebook or Instagram feeds.

Schultz was equally outspoken when it came to the overall popularity of Meta’s apps.

“Young adult and teen numbers are improving in the U.S., but we’re not happy. Our brand sentiment trends are improving, but that doesn’t mean they’re doing well in the U.S. and similar countries. No,” writes Schultz.

The note matches the drumbeat of Zuckerberg’s messages in recent months. Employees need to work harder to ensure the meta “wins” again. The company is reportedly planning another layoff. Zuckerberg, in particular, wants to reduce the hierarchy of middle management as part of an effort to increase efficiency.

For Meta, which came to a sudden halt last year after two decades of near-unstoppable growth, the memo also shows just how tenuous the company’s trajectory is. It’s too early to call Meta’s recent stock market rally revived.

As Meta and the rest of the tech industry face unprecedented economic uncertainty, Meta’s leaders are not going to let the company rest on its laurels. Schultz’s memo makes it clear that Meta still has a lot of work to do before returning to its glory days.

Read the full notes below.

Hey team, there was another high street reaction to the earnings announcement (and preparations for it), similar to when we spoke in Q&A after the stock market crashed last year. It’s nice to see that we’ve improved our discipline and people think it’s not as bad as they thought. So I want you to remember what I said last year. Like last year’s stock market crash, it’s not as bad as they think it is, but in times like this, it’s probably not as good as they think. This upturn is just beginning. We still have the efficiencies needed to better operate this company in the new reality. We are still at Apple’s whim. The relative monetization efficiency has grown on Reel, but it’s still very low, Reel has grown significantly, but it’s still smaller than TikTok, and the number of young people in the US and his teens is growing. but not satisfied. Sentiment trends are improving for our brands, but that doesn’t mean they’re doing well in the US and similar countries. Please continue. Instead of focusing on market reactions or stock prices, you should keep your eyes on the horizon. I believe in this company. I am really bullish on the long term future. For all the things that made me feel positive last year, I feel positive. There are still many highs and lows that require long-term concentration and leveling your head, whether the outside noise is positive or negative.

Stay focused and keep shipping

Source link

Leave a comment

Your email address will not be published. Required fields are marked *