It was both a bad week for Meta Platforms, and a great one. The Facebook owner’s shares fell 10 per cent after it reported earnings on Wednesday, yet its sales and profit are growing at what, for normal companies, would inspire jubilation. This contradiction isn’t so strange, because there are really two Metas: the one that exists, and the one Mark Zuckerberg is building. One somewhat offsets the other.
Look from a distance and Meta is a surprisingly simple business. Almost all of its revenue comes from selling ads on Facebook and Instagram. Growth is driven by two fairly uncomplicated levers: how many ads it serves, and how much it charges advertisers for each ad. Those have sometimes swung around wildly, but now are both growing smartly. Meta’s ad sales in the latest quarter grew 33 per cent, the fastest rate since September 2021.
