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Facebook’s stumbling ad business

Facebook’s stumbling ad business

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Major tech corporations are releasing their quarterly results this week starting with Alphabet (GOOGL, $107.51) and Microsoft (MSFT, $258.83) on Tuesday, Meta (META, $166.65) on Wednesday, and Apple (AAPL, $152.95) and Amazon (AMZN, $121.14) tying things up on Thursday. Investors will be watching for signs that growth is about to resume in tech sector that has been severely impacted by rising interest rates, inflation, and recessionary concerns.

Meta is more concerned with user behavior, with Facebook user engagement declining as they turn to other platforms, which could cause marketers to look elsewhere. For advertisers, Facebook stands out because of its user tracking capabilities across various third-party websites and targeting choices.

But the company reported a daily active user increase of only 4% in the first quarter to 1.96 billion. Meanwhile, rival Snap (SNAP, $9.95) last week reported that it had 347 million daily active users, an increase of 18% from the previous year. Analysts say that the iOS upgrade from Apple has made it more difficult for advertisers to target consumers, which has negatively affected both Facebook and Snap.

Why it matters

Undoubtedly, TikTok has captured a sizable portion of the valuable youth market. This trend has accelerated since the pandemic and is continuing to hinder Facebook and Snap's growth. Facebook CEO Mark Zuckerberg blames the iOS update as well as more general macro problems, such as the slowdown in e-commerce.


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