TikTok slashes revenue targets by $2BN amid global online advertising slump hitting tech firms

TikTok slashed its revenue target for this year by $2 billion as the popular video-sharing app is dealing with the same global online advertising slump that’s impacting all major tech firms, including Meta and Twitter. 

The revenue targets were chopped by 20 percent, from a projected $12-$14 billion to about $10 billion. CEO Shou Zi Chew announced the slash during a virtual all-hands meeting in September, four people told Financial Times. 

In that meeting, staffers were blamed for not driving enough sales in the areas of advertising and ecommerce, the business publication reported.

The lower revenue targets are the first clear signal that TikTok, which is hugely popular especially among young adults, is facing the same headwinds as Mark Zuckerberg‘s Meta and Elon Musk‘s Twitter. 

TikTok slashed its revenue target for this year by $2 billion as the popular video-sharing app is dealing with the same global online advertising slump that’s impacting all major tech firms

Reality set in this week, as Meta laid off 11,000 employees – about 13 percent of its workforce – with CEO Mark Zuckerberg taking responsibility for the massive cuts. The California-based company recently posted a 4 percent revenue decline.

Silicon Valley mainstays that saw a massive boom in revenue during the Covid pandemic – thanks to lockdowns that forced everyone online – are now grappling with the fact that consumers are defaulting back to their typical spending and behavior patterns. 

Meta added a whopping 43,000 employees since the Covid pandemic began, according to PCMag, having placed a bet on ecommerce continuing its blazing growth. 

Reality set in this week, as Meta laid off 11,000 employees – about 13 percent of its workforce – with Zuckerberg taking responsibility for the massive cuts. The California-based company recently posted a 4 percent revenue decline. 

The mogul said: ‘Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.’

Twitter, newly under the leadership of Elon Musk, eliminated about 3,700 jobs this week – although a portion of the workers have allegedly been asked to come back – as the platform faces declining advertising revenue and abandonment by a swath of users who are turned off by the new owner. 

Google-owned YouTube and Snap also saw slowdowns in third-quarter revenue growth and missed Wall Street’s estimates. 

According to eMarketer, U.S. advertisers are predicted to spend $65.3 billion on social media in 2022, a year-on-year increase of 3.6 percent, which is about 10 times slower than in 2021. 

TikTok, which is owned by China-based ByteDance, has experienced tremendous growth over the last two years. During the Covid lockdowns, tens of millions of new users downloaded the app and were able to connect with people around the world.

The platform, which was founded in 2016, has attracted 1 billion users in just over five years. Only Facebook messenger reached a billion users faster, in 4.9 years, according to Statista.

Record labels including Universal Music Group, Sony Music Entertainment and Warner Music Group are reported to be in talks with the tech company to obtain a larger share of its advertising revenue and royalties with them. 

Twitter CEO Elon Musk and Meta CEO Mark Zuckerberg both lead social media companies that are withering under the global online advertising downturn

Twitter, newly under the leadership of Elon Musk, eliminated about 3,700 jobs this week – as the platform faces declining advertising revenue and abandonment by a swath of users who are turned off by the new owner