Zuckerberg Also Hit by Tariff Backlash: "Meta Faces $7 Billion Loss"

Analysis by Market Research Firm MoffettNathanson

According to an analysis, if Chinese e-commerce companies such as Temu and Shein reduce their advertising budgets for US Meta affiliates in response to the backlash from President Donald Trump's tariff hikes, Meta could suffer losses of up to $7 billion (approximately 9.9673 trillion won) this year alone.

On April 17 (local time), US broadcaster CNBC reported this, citing a report from market analysis firm MoffettNathanson.

Due to the impact of the trade war, Chinese e-commerce companies Temu and Xiuin have significantly cut their advertising spending on the US big tech company Meta.

MoffettNathanson's analysis of Meta's annual management report from last year showed that Meta's revenue from China in the previous year was $18.35 billion, accounting for 11% of its total revenue. The industry believes that most of this amount came from advertising spending by Temu and Shein.

Since April 9, Temu has completely halted its advertising spending on the Google Shopping platform. This coincided with the imposition of tariffs on Chinese-made products. In the first two weeks of this month, Shein reduced its average daily advertising spending on Meta, TikTok, YouTube, and Pinterest by 19%. In particular, its advertising spending on YouTube was cut by nearly half compared to the same period last year.

In its report, MoffettNathanson stated, "China's importance to Meta's business is extremely high," adding, "Although Meta does not disclose country-by-country revenue figures for Europe, logically, China is its second-largest market after the United States. This is a remarkable achievement, considering that Meta has neither users nor active platforms in China."

If a global economic downturn becomes evident, the impact on Meta could be even greater. The report stated, "If a prolonged economic recession actually occurs due to the US-China trade dispute, Meta's advertising revenue could decrease by $23 billion this year, and its operating profit could fall by up to 25%." It also predicted, "If trade tensions escalate and trigger a recession, Meta will face the dual challenge of an overall decline in advertising and a reduction in US-bound advertising spending by Chinese companies."

As if anticipating this, Mark Zuckerberg sold 1.1 million shares of Meta stock during the first quarter of this year through charitable foundations he established with his wife Priscilla Chan, such as the Chan Zuckerberg Initiative. The sales took place in January and February of this year, when Meta's stock price reached an all-time high following the company's aggressive announcements of artificial intelligence (AI) investments. According to Bloomberg, the value of the shares sold amounted to $733 million (about 1.04 trillion won). This represents a decline of more than 30% from the peak.

Temu and Shein have sharply reduced their advertising spending due to the Trump administration's aggressive tariffs. CNBC reported that Temu was in fact Meta's largest advertiser. However, James McDonald of global marketing research firm WARC noted, "Because brand loyalty among customers of both Temu and Shein is not strong, the reduction in advertising will affect their sales," adding, "They must constantly advertise to retain customers."