How Meta Finds Growth in China Despite Being Banned: Q3 Earnings Report

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Meta Sees Growth in China Despite Ban

Despite being banned from operating in China, Meta (formerly known as Facebook) is experiencing significant growth in the country. In its third-quarter earnings report, Meta announced a 23% increase in sales compared to the previous year. This demonstrates Meta’s resilience in a challenging digital advertising market, outperforming competitors like Snap and Twitter.

Susan Li, Meta’s finance chief, highlighted the role of Chinese companies in driving this growth. These companies are spending substantial amounts on Meta’s platforms, such as Facebook and Instagram, to target their advertising to billions of users worldwide.

Strong Growth in Rest of the World Category

Among Meta’s geographic regions, the rest of the world category showed the strongest growth at 36%, followed by Europe at 35%, Asia-Pacific at 19%, and North America at 17%. China played a significant role in the rapid expansion of the rest of the world category, with increased demand from Chinese advertisers targeting users in Brazil.

China’s Great Firewall and Meta’s Growth

Facebook, along with Google and Twitter, remains blocked in China due to the country’s Great Firewall. Despite this, Meta has experienced a long-term trend of growth from the China market. While there have been periods of volatility, the opening up of China and easing of worldwide supply chain problems have led Chinese companies to expand globally using Meta’s platform.

Potential Volatility and Unpredictability

Li emphasized the potential for future volatility due to various macro factors that are difficult to predict. She cited the Israel-Hamas war in the Middle East as an example of unpredictable events impacting Meta’s revenue. Softness in ad demand at the beginning of the fourth quarter was observed, potentially linked to the conflict. However, it is challenging to directly attribute demand softness to specific geopolitical events.

Li’s cautionary comments led to a drop of over 3% in Meta’s shares during extended trading.

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