Meta Platforms, led by Mark Zuckerberg, on Wednesday reported a 4% year-over-year drop in revenue to $27.7 billion in the September quarter as competition from short-video app TikTok dragged down the social media giant’s ad sales .

Meta earned $4.4 billion, or $1.64 per share, for the quarter ended September 30, 2022, down 52% from $9.19 billion, or $3.22 per share, in the corresponds to the same period of the previous year.

Meta’s tepid quarterly results come at a time when the tech giant plans to spend $10 billion a year on the Metaverse. It also follows weak earnings from Google parent Alphabet Inc. and Microsoft this week.

Meta’s shares fell 19% in after-hours trading to $105.20. If the sell-off continues through Thursday, it will be the lowest level since 2016.

The company expects total revenue of between $30 billion and $32.5 billion for the fourth quarter of 2022. “Our guidance assumes that foreign currencies will offset overall fourth-quarter revenue growth by approximately 7% based on current exchange rates,” Meta said.

Meta expects headcount by the end of 2023 to be around the same level as in the third quarter of 2022. “We’re making significant changes across the board to work more efficiently. We’re keeping some teams flat in terms of headcount, shrinking others and investing headcount growth only in our highest priorities,” the company says.

Meta states that it has taken a closer look at all areas of business expenses. However, these moves follow a significant investment cycle, so it will take time for them to have an impact in terms of our overall spending trajectory, he adds.

Some steps, like the ongoing rationalization of office space, will result in additional costs in the short term, Meta says.

“We expect total spending for 2022 to be in the range of $85 billion to $87 billion, updated from our previous guidance of $85 billion to $88 billion. This includes an estimated $900 million in additional costs related to the consolidation of our office space, which we expect to book in Q4 2022,” the company said.

“We anticipate our total spending for full year 2023 to be in the range of $96 billion to $101 billion. This includes an estimated $2 billion in costs related to the consolidation of our office space,” it adds.

“Meta forecasts that operating losses associated with the Reality Labs unit responsible for its Metaverse investments will increase significantly year-on-year in 2023,” the company said.

“We expect 2022 capital expenditures, including capital lease payments on finance leases, to be in the range of $32 billion to $33 billion, which is updated from our previous range of $30 billion to $34 billion. For 2023, we expect capital expenditures to be in the range of $34-$39 billion, driven by our investments in data centers, servers and network infrastructure. Increasing AI capacity essentially drives our overall investment growth in 2023,” says Meta.