TikTok has slashed its 2022 advertising revenue forecast by 20%, signaling that the rapidly growing short-video app is feeling the pain of the digital advertising slump.
The Chinese company lowered its target for ad revenue to $10 billion from between $12 billion and $14.5 billion, The Financial Times reported. The cut was announced during a recent online staff meeting led by CEO Shou Zi Chew, the report said, citing employees who attended the meeting.
The revised forecast still represents 150% growth from last year’s roughly $4 billion in revenue, The Wall Street Journal noted.
Like other social media companies, TikTok’s primary revenue stream is from advertising, which is seeing a broad slowdown amid economic uncertainty. The major social platforms revealed the pain of an ad slump in their recent quarterly financial reports amid wariness surrounding the U.S. and global economies, and many economists are predicting a recession.
YouTube, like TikTok, is popular with Gen Z and younger users; it reported a 2% drop in ad sales during the summer months, its first decline since 2019.
Facebook parent Meta Platforms posted a 4% revenue decline, its second straight quarter of falling revenue. And it forecast another drop for the last three months of the year, leading in part to the company’s first major layoffs since its founding, with 11,000 staffers expected to get the ax.
Snap Inc.’s revenue came in short of Wall Street’s expectations for the quarter, and the company said it expects “disruptions” to its ad business continuing into Q4.
Twitter, which was taken private by Elon Musk last month and did not post third-quarter results as a public company, is also seeing an advertising decline, though that appears to be driven by erratic policies since the takeover and a dropoff in policing the site.
US advertisers are predicted to spend $65.3 billion on social media this year, an increase of just 3.6% over last year, reflecting growth around 10 times slower than in 2021, the FT reported, citing estimates from eMarketer.
Despite the challenged environment, TikTok reportedly blamed its revenue shortfall on staff for not driving enough sales, but several current and former employees said the company had overspent in other areas, from salaries to social events.
The virtual meeting also included an announcement that TikTok’s Chinese parent company ByteDance is unlikely to go public this year, according to the FT. The company has teased an initial public offering several times, and had planned to list overseas before the Chinese government began cracking down on the nation’s tech companies last year.
The decision comes amid a massive slowdown in public listings this year, as the volatile market has moved mostly lower. Despite recent gains, the S&P 500 Index remains down about 17% since the start of the year.
