The US owner of Facebook and Instagram was hit by a fall in advertising sales in the three months to July - causing the first year-on-year revenue decline in the firm's history.
Meta's total revenue slipped 1% to £23.7billion, but the company has fended off a decline in users.
The BBC says analysts fear the company's growth may have peaked after years of large gains.
Rivals such as TikTok have eroded its popularity, while more firms are competing for ad spending.
Meta, which typically commands more than 20% of the global ad market, warned investors that ad sales were likely to fall again in the months ahead, as e-commerce spending falls from its pandemic boom and companies worried about inflation and the war in Ukraine spend more cautiously.
Meta boss Mark Zuckerberg said the firm would reduce its hiring "steadily" over the next year, a response to the downturn and the company's plans to shift investment into new areas, including its virtual-reality platform, Horizon, in a bet that the so-called metaverse is its best prospect for growth.
Scrutiny from regulators
Those plans have drawn scrutiny from regulators, including the Federal Trade Commission, America's consumer watchdog, which said it would sue to block Meta's acquisition of the virtual-reality fitness company Within Unlimited, which owns the app Supernatural, over monopoly concerns.
Any pay-off from those plans remains years away, with Meta's struggle to increase its users a sign of limited growth in the years ahead, said Angelo Zino, senior equity analyst at CFRA Research.
"Essentially it's now become a low-to no-growth company," he said.
Earlier this year, Facebook reported its first-ever decline in daily users.
In response, the company, which also owns WhatsApp, recently shifted its algorithms on Instagram and Facebook to act more like TikTok - recommending posts to users from outside the base of accounts they follow.
The changes may be working - 1.97billion people logged into Facebook on average each day in June - up from 1.96billion in March.
Meta shares dropped 4.65% in after-hours trading in the US.
Interest rate hike
Meanwhile, the US central bank has announced another large interest-rate hike as it battles to rein in soaring prices in the world's largest economy.
The Federal Reserve said it would increase its key rate by 0.75%, targeting a range of 2.25% to 2.5%.
The bank has been raising borrowing costs since March to try to cool the economy and ease price inflation.
But the BBC says fears are rising the moves will tip the US into recession.
Recent reports have shown falling consumer confidence, a slowing housing market, jobless claims rising and the first contraction in business activity since 2020.
Many expect official figures this week will show the American economy shrank for the second quarter in a row.
In some countries, that milestone is considered a recession - though it is measured differently in the US.
FTSE 100
The UK's top share index, the FTSE 100, was up 21 points at 7,369 shortly after opening this morning, following yesterday's 41-point gain.
Brent crude futures were up 1.25% at $107.95 a barrel.
Companies reporting today
- Full-year results: Diageo
- Half-year results: Anglo-American, BAE Systems, Barclays, Centrica, Hammerson, Inchcape, ITV, National Express, Nestle, Rathbone Brothers, Rentokil, Schroders, Shell, Smith & Nephew, St James's Place, Weir
- Trading updates: Amazon, Apple, BT