Facebook parent company Meta posted lower fourth-quarter profit and revenue on Wednesday, hurt by a downturn within the internet advertising market and competition from rivals reminiscent of TikTok.
But the corporate’s stock soared in prolonged trading, as its revenue beat Wall Street’s muted expectations and the Menlo Park, California-based company announced a $40 billion stock buyback.
That is the third consecutive quarter of revenue decline for the tech giant, which laid off 11,000 staff, or about 13% of its workforce, in November. CEO Mark Zuckerberg blamed the layoffs on aggressive hiring in the course of the pandemic, when Meta’s business boomed because people were stuck at home, scrolling on their phones and computers, glued to social media. But because the lockdowns ended and other people began going outside again, revenue growth began to falter.
“(Our) management theme for 2023 is the ‘Yr of Efficiency’ and we’re focused on becoming a stronger and more nimble organization,” Zuckerberg said in a press release Wednesday.
Meta’s forecast is a sign the ad market could also be recovering.REUTERS
Meta’s mega stock buyback appeared to ease investors’ concerns over the corporate’s spending on the “metaverse” — an immersive digital universe, viewed through a headset, that Zuckerberg predicts will eventually replace smartphones as the first way people use technology.
Meta said it earned $4.65 billion, or $1.76 per share, in the ultimate three months of 2022. That’s down 55% from $10.29 billion, or $3.67 per share, a 12 months earlier.
Analysts were expecting earnings of $2.26 per share, in keeping with a poll by FactSet.
Revenue fell 4% to $32.17 billion from $33.67 billion. Analysts were expecting $31.55 billion.
Meta ended 2022 with a 1% revenue decline from 2021 — its first year-over-year drop.
“The downturn was barely lower than we thought it might be, but that’s not necessarily a very good sign,” said said Insider Intelligence analyst Debra Aho Williamson. She said that Meta’s 2022 results were “a stark difference” from 2021, when the corporate’s worldwide revenue grew 37%.
“Now the challenge is to return to positive territory. Meta needs to remain focused on stabilizing its core platforms, Facebook and Instagram,” she added. “And with losses at its VR division mounting, Mark Zuckerberg goes to have to simply accept an unlucky reality: Virtual worlds are simply not what businesses or consumers want right away.”
Meta’s Reality Labs segment, which incorporates its virtual and augmented-reality hardware reminiscent of its headsets, in addition to software and related content, posted a fourth-quarter operating lack of $4.28 billion, compared with a lack of $3.3 billion a 12 months earlier.
Though revenue declined, Meta continued so as to add users on its social media apps. Facebook’s each day energetic users hit 2 billion for the primary time — up 4% from a 12 months earlier. Facebook had 2.96 billion monthly energetic users at the top of the 12 months. Meta’s monthly energetic users on what it calls its “family” of apps — Instagram, Facebook, WhatsApp and Messenger — were 3.74 billion as of Dec. 31.
Meta’s shares jumped almost 19% in after-hours trading. The stock had closed the regular trading session at $153.12, down 52% within the last 12 months.
