Facebook’s parent company Meta reported lower fourth-quarter profits and revenue on Wednesday, hit by a downturn within the internet advertising market and competition from rivals akin to TikTok.
But the corporate’s shares soared in prolonged trading as its revenue surpassed pent-up Wall Street expectations and the Menlo Park, Calif., company announced a $40 billion share buyout.
This is the third straight quarter of a decline in revenue for the tech giant, which cut 11,000 employees in November, or about 13% of its workforce. CEO Mark Zuckerberg blamed the layoffs on aggressive hiring through the pandemic, when Meta’s business boomed as people were stuck at home, flipping through phones and computers, glued to social media. But as lockdowns ended and other people began going outside again, revenue growth began to slow.
“(Our) governance theme for 2023 is ‘Year of Efficiency’ and we’re focused on becoming a stronger and more agile organization,” Zuckerberg said in a Wednesday statement.
Mega buyback of Meta shares looked as if it would ease investor concerns about company spending on ‘metaverse’ – immersive digital universe, viewed through a headset that Zuckerberg believes will eventually replace smartphones as the first way people use technology.
Meta said it earned $4.65 billion within the last three months of 2022, or $1.76 per share. That’s down 55% from $10.29 billion, or $3.67 per share, a 12 months earlier.
According to a survey conducted by FactSet, analysts expected a profit of USD 2.26 per share.
Revenue fell 4% to $32.17 billion from $33.67 billion. Analysts expected USD 31.55 billion.
Meta ended 2022 with a 1% decrease in revenue in comparison with 2021 – the primary year-on-year decline.
“The downturn was a bit smaller than we expected, but that is not necessarily sign,” said Debra Aho Williamson, an analyst at Insider Intelligence. She said Meta’s 2022 results were a “marked difference” from 2021, when the corporate’s global revenue grew 37%.
“Now the challenge is to get back into positive territory. Meta must give attention to stabilizing its core platforms, Facebook and Instagram.” “And with losses within the VR division mounting, Mark Zuckerberg may have to simply accept an unlucky reality: virtual worlds just aren’t what firms or consumers want straight away.”
The Meta Reality Labs segment, which incorporates virtual and augmented reality hardware akin to headsets, in addition to software and related content, posted a fourth-quarter operating lack of $4.28 billion, up from a lack of $3.3 billion a 12 months earlier .
Although revenue declined, Meta continued so as to add users on its social media apps. Facebook’s each day energetic users surpassed 2 billion for the primary time, up 4% from the 12 months before. At the top of the 12 months, Facebook had 2.96 billion monthly energetic users. Monthly energetic Meta users within the so-called “family” of apps – Instagram, Facebook, WhatsApp and Messenger – stood at 3.74 billion as of December 31.
Meta shares rose nearly 19% in after-hours trading. The stock ended the regular trading session at $153.12, down 52% over the past 12 months.
