The parent company of Facebook and Instagram has announced that it earned $32 billion in revenue during the fourth quarter, which has led to an increase in the stock price
Investors with a strategic approach received positive updates from the social media giant’s earnings report released on Wednesday. The report revealed that the decline in revenue was less than anticipated by analysts. Meta, the parent company of Instagram and WhatsApp, disclosed a revenue of $32 billion in the fourth quarter, which resulted in an increase in its stock value during after-hours trading on the same day. Moreover, the company decreased its cost projections for 2023 by $5 billion and launched a $40 billion share repurchase initiative.
Meta’s expenses surged by 22% in Q4 compared to the previous year, partially due to charges associated with their restructuring endeavors, according to the company’s statement. Moreover, Meta had also augmented its spending on Reels, a short-form video content product, and the metaverse.
According to Mark Zuckerberg, 2022 posed difficulties, but he believes that they managed to achieve significant progress on their primary objectives and positioned themselves for improved outcomes this year, as long as they continue to prioritize efficiency.
Meta’s CEO, Mark Zuckerberg, stated that the investments in AI-generated content and Reels, which competes with TikTok, are beginning to yield positive results. He attributed this progress as major contributors to the company’s success. Additionally, Meta’s focus for 2023 is on enhancing efficiency and agility, as part of its management theme. Despite a 4% decrease in revenue to $32.17bn from $33.67bn, Meta still exceeded analysts’ expectations, who had predicted a revenue of $31.55bn.
Despite the positive outlook, Zuckerberg is calling for further cost-cutting measures, indicating that the company’s employees may face another challenging year ahead. Meta had already laid off 11,000 workers and made changes to its management team in response to a revenue drop and inflationary market pressures in November. Zuckerberg has suggested that more layoffs and management cuts may be necessary in 2023.
Zuckerberg acknowledged that the difficulties faced by the company in 2022 had compelled them to examine ways to reduce costs. He noted that some of the cuts, such as streamlining management layers, had surprisingly improved the company.
Zuckerberg shifted his focus from highlighting the significant investments made by the company in building the metaverse, a move that has caused significant worries among investors, and instead emphasized the company’s investments in its latest AI Discovery Engine. He mentioned that the engine would suggest content that people desire to view.
Derrick Johnson, the president of the NAACP, commented on Twitter that Mark Zuckerberg’s decision to restore Trump’s accounts demonstrated a prioritization of profits over people’s safety. Johnson found it surprising that despite Trump’s use of the platform to spread hate, conspiracy theories, and incite violence at the Capitol, Zuckerberg still felt it was insufficient grounds for removal.
Despite a more than 60% decrease in the company’s stock in 2022, Zuckerberg remained optimistic about the upcoming year’s earnings. He attributed the expected improvements, in part, to reductions in personnel and office space. Additionally, he highlighted the upcoming release of a new virtual reality headset and generative AI features that would enable creators to utilize AI to design avatars, images, and videos.
According to reports, Meta was granted court approval this week to move forward with the acquisition of Within, a virtual reality startup. The acquisition of this VR fitness company is expected to allow Within’s technology to be incorporated into Zuckerberg’s metaverse.
Despite experiencing a significant decline in the previous year, Meta’s stock has recently been on the rise in 2023.
Mike Proulx, an analyst at Forrester Research, stated that Meta will have to decide whether it is a metaverse company or a short-form video company in 2023. However, both business models face challenges that make it difficult for Meta to deliver short-term business value.
