The impact of the Gaza war on the online advertising business worries Meta financial experts.

The impact of the Gaza war on the online advertising business worries Meta financial experts.

According to a report by finanzen.net, the Facebook group Meta is preparing for the fact that the Gaza war could affect its online advertising business. Demand for ads weakened at the start of the current quarter, coinciding with the Islamist Hamas attack on Israel and the start of the Gaza war. Similar conflicts in the past have already weakened the advertising business. However, in the last quarter, Meta still saw an increase in revenue, allowing founder and CEO Mark Zuckerberg to continue investing billions in developing virtual worlds without investor concerns.

However, the current quarter shows a year-on-year decline in sales due to the impact of the Gaza War. The group continues to spend a lot of money on the development of the “Metaverse” and the devices intended for it, although the Reality Labs division is recording high operating losses. Year-to-date, Reality Labs' operating loss has reached $11.5 billion. The apps Facebook and Instagram, on the other hand, made a profit of $41.8 billion during this time.

Investors are concerned that Meta is investing too much money in a technology with uncertain profit prospects. Nevertheless, Zuckerberg repeatedly emphasizes that he sees the future in the “metaverse” and will therefore keep investments high.

Meta's announcement that it will make artificial intelligence a priority in the coming year, both in software development and computing resources, could have an impact on the use of Meta apps.

Meta's shares initially reacted positively to the quarterly figures, but turned negative when the uncertain advertising situation was mentioned. Meta's revenue forecast for the current quarter shows an unusually broad range of $36.5 billion to $40 billion.

The rating for Meta by the analysis firm Jeffries remains at “Buy” with a price target of $400. The social network operator's growth in the third quarter was the strongest since the fourth quarter of 2021. The sales target for the final quarter of 2023 leaves room for improvement, despite a wide range.

Source: www.finanzen.net