Mark Zuckerberg’s Meta, parent of Facebook and Instagram, posted upbeat financials today to Wall Street’s surprise and relief, beating on revenue and daily active users. Earnings fell but were hit by a $4.2 billion restrcuturing charge after the social media giant laid off 11,000 people late last year.
This was Meta’s first financial report since the company slashing jobs in Nov. amid a retrenchment in the tech sector. Meta specifically has been hampered by hefty investmet in, and Wall Street skepticism of, its huge push into the Metaverse. Snap’s gloomy outlook yesterday wasn’t a great harbinger for ad-suppported internet services but Facebook blew by that.
Fourth-quarter sales of $32.2 billion were down 4% from the year before but beat expectations. Earnings fell to $4.6 billion from $10.2 billion. EPS was $1.76 vs $3.67 but would have been signifinicantly higher excluding that $4.2 billion charge.
Facebook’s daily active users (DAU) of 2 billion at year end were up 4%. Monthy active users (MAU) of 2.96 billion were up 2%.
“Our community continues to grow and I’m pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives,” said Zuckerberg. “The progress we’re making on our AI discovery engine and Reels are major drivers of this. Beyond this, our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”
On a call with analyst later Wed. afternoon to talk earnings and outlook, the company said it will continue to push ahead with two core projects, AI and the Metaverse, but it’s keeping spending more contained than prevoius estimates. Zuckerberg said users of its three core social media platforms including WhatsApp have never been stronger — something investors may be overlooking — and TikTok rival Reelz is taking off, although it’s still a challenge to translate user enthusiasm into revenue.
Facebook stock jumped nearly 20% in late trading on the report. The company announced a $40 billion increase to its share repurchase authorization, which didn’t hurt.
The company and broader markets had already rallied this afternoon as Fed chair Jerome Powell indicated that a string of suffocating interest rate hikes, which many fear may be pushing the country into recession, are finally starting to have an impact on inflation. Advertisers are very fickle ahead of recession and that pinches media and tech.
The job still isn’t done, Powell said after the Fed’s latest in a string of rate hikes, but the end may be in sight.
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