Meta, Facebook's parent company, posted a stronger-than-expected drop in revenue and unexpectedly weak next-quarter forecasts.

Meta has just announced its second quarter business results with many unexpected weaknesses. Specifically, revenue reached 28.82 billion USD compared to the investor's forecast of 28.94 billion USD, daily active users (DAU) was 1.97 billion, average revenue per user (ARPU) ) is $9.82. Those numbers sent Meta stock down 3.8% in after-hours trading.

Meta's share price has fallen by about half its value since the start of the year, reflecting investor concerns about the "health" of its core advertising business. Facebook ads are affected by privacy updates on iOS from 2021 that limit the ability to track users. Another factor is the weakening economy, which has led some companies to cut advertising budgets.

Meta's second-quarter revenue fell about 1% from a year ago. This is the first time Meta has recorded a revenue decline since going public a decade ago. Worse, Meta expects third-quarter revenue of just $26 to $28.5 billion, below Wall Street's $30.4 billion estimate as ad demand continues to weaken.

In a phone call with analysts, CEO Meta Mark Zuckerberg said the company will reduce staffing next year to tighten spending amid the economic slowdown. “This is a more demanding period and I hope we can get more done with less resources.”

The Meta results follow trends from last week's Snap and Twitter. Both companies reported disappointing numbers.

Difficult to overlap with Meta when TikTok is still growing well, capturing users and advertising. Zuckerberg revealed Reels, the Instagram feature that competes with TikTok, has reached $1 billion in annual revenue, but is still not as effective as Instagram Stories and main feed.

Meta HR has grown 32% from a year ago, to 83,553 people. However, the company will slow down the rate of new hires. Total costs in 2022 range from $85 to $88 billion, of which, a large part is for the Reality Labs division - which develops virtual universes and virtual and augmented reality technologies. Reality Labs brought in $452 million in revenue but a record loss of $2.8 billion in the second quarter.

Earlier this week, Meta raised the price of the Quest 2 VR headset by $100 due to increased manufacturing and shipping costs. Although Meta is leading the VR wearables market, the market is still too small compared to mobile advertising.