Facebook parent company Meta posted lower fourth-quarter profit and revenue on Wednesday, hurt by a slump in the online advertising market and competition from rivals such as TikTok.
But the company’s shares rose in extended trading as its revenue beat Wall Street’s muted expectations and the Menlo Park, California-based company announced a $40 billion stock buyback.
This is the third consecutive quarter of declining revenue for the tech giant, which in November laid off 11,000 employees, or about 13% of its workforce. CEO Mark Zuckerberg attributed the layoffs to aggressive hiring during the pandemic, when Meta’s business was booming as people were stuck at home, scrolling through their phones and computers, glued to social media. But as soon as the lockdown ended and people started going out again, revenue growth began to falter.
“(Our) management theme for 2023 is ‘The Year of Efficiency’ and we are focused on becoming a stronger and more agile organization,” Zuckerberg said in a statement on Wednesday.
mega stock of meta buy back appeared to ease investors’ concerns over the company’s spending on the “metaverse” — an immersive digital universe viewed through a headset, which Zuckerberg predicts will eventually replace smartphones as the way people use technology. Will be replaced as the primary method.
Meta Platforms Inc. said it earned $4.65 billion, or $1.76 per share, in the last three months of 2022. That’s down 55% from $10.29 billion, or $3.67 per share, a year ago.
Analysts were expecting earnings of $2.26 per share, according to a survey 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 decline.
“The slowdown was a little steeper than we thought, but it’s not a good sign,” said Insider Intelligence analyst Debra Aho Williamson. Revenue grew 37%.
“The challenge now is to return to positive territory. Meta needs to focus on stabilizing its core platform. Facebook And Instagram“And with mounting losses in its VR division, Mark Zuckerberg has to accept an unfortunate reality: virtual worlds simply aren’t what businesses or consumers want right now.”
Meta’s reality The Labs segment, which includes its virtual and augmented-reality hardware such as its headsets, as well as software and related content, reported an operating loss of $4.28 billion in the fourth quarter, compared to a loss of $3.3 billion a year earlier.
Although revenue declined, Meta continued to add users to its social media apps. Facebook’s daily active users reach 2 billion for the first time – up 4% from a year ago. Facebook had 2.96 billion monthly active users at the end of the year. Monthly active users of Meta, which it calls its “family” of apps – Instagram, Facebook, WhatsApp and Messenger — 3.74 billion as of December 31.
“The increase in monthly users … is a good sign that there is still a small pool of new social network users (or perhaps lapsed users) Who? willing to try Facebook,” Williamson said.
For the current quarter, Meta is forecasting revenue between $26 billion and $28.5 billion. Analysts expected $27.18 billion. The company slashed its outlook for 2023 expenses to $89 billion to $95 billion from its earlier guidance of $94 billion to $100 billion.
Shares of Meta jumped nearly 19% in after-hours trading. The stock closed the regular trading session at $153.12, down 52% in the past year.
The text of this story is published from a wire agency feed without any modification.
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