Stock buyback; Meta, the parent company of Facebook, reported higher-than-expected fourth-quarter sales and announced a $40 billion increase in its stock repurchase authorization, leading to a roughly 20% surge in after-hours trading.
Meta Stock Addresses Privacy Modifications
According to Refinitiv, Meta’s sales declined 4% to $32.2 billion in the fourth quarter, from $33.6 billion the previous year, although it was higher than analysts’ projections of $31.53 billion. The company’s net income fell to $4.7 billion (or $1.76 per share) in the fourth quarter, down from $10.3 billion (or $3.67 per share) the previous year, falling short of analysts’ forecasts of $2.22 per share.
“2022 was a hard year, but I think we concluded it having made solid progress on our core targets and putting ourselves up to achieve stronger earnings this year as long as we maintain pushing on efficiency,” stated Meta Founder and CEO Mark Zuckerberg. “Our management theme for 2023 is the ‘Year of Efficiency,’ and we’re focused on being a stronger and more agile organisation,” he continued.
Zuckerberg highlighted that the company’s ambitions have not altered since last year and the “two key technical waves” driving Meta’s roadmap are “AI today and over the longer term the metaverse”.
According to the Meta CEO, AI is the backbone of the company’s discovery engine and ad business, and the evolving technology will enable numerous new products and changes within Meta’s applications.
“Generative AI is a tremendously fascinating new topic with so many diverse applications, and one of my ambitions for Meta is to build on our research to become a leader in generative AI, in addition to our leading work in recommendation AI,” he said.
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Furthermore, the social network company will unveil its next-generation consumer headset, which will include Meta Reality, this year. Facebook, which was relaunched as Meta in 2021, is committed to bringing the metaverse, an immersive digital reality, to life and is investing heavily in this area.
Reality Labs’ revenue was $727 million, down 17% year on year owing to decreased Quest 2 sales. Reality Labs’ expenses were $5 billion, a 20% increase attributable mostly to employee-related and restructuring-related costs, according to the company.
The unit’s operational loss increased from $3.3 billion to $4.3 billion at the same time previous fiscal year, bringing the unit’s overall operating loss for the year to $13.72 billion. Meanwhile, as the firm focuses on efficiency and enhancing business performance, its overall costs and expenses for the fourth quarter and full year of 2022 were $25.77 billion and $87.66 billion, respectively, a rise of 22% and 23% year-on-year.
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What is the Timing of the United States stock market opening in 2023?
Meta stated that this comprised $4.20 billion and $4.61 billion in restructuring expenses in the fourth quarter and full year of 2022, respectively. As of December 31, 2022, Meta had 86,482 employees, a 20% rise over the previous year.
This comprises the vast majority of the nearly 11,000 employees affected by the November 2022 layoff, according to the business. ‘App Family’ by Meta Meta, which also owns Instagram and WhatsApp, stated that its ‘Family of Apps’ membership is growing.
According to the company, over 2.96 billion individuals used at least one of its applications daily in December, and approximately 3.74 billion people used at least one monthly. “I’m thrilled with the high levels of engagement across our applications,” Zuckerberg said, adding that “the development we’re made on our AI discovery engine and Reels are big drivers of this.”
In December, Facebook topped two billion daily active users (DAUs) for the first time, increasing 4% or 71 million over the previous year. In December, DAUs made up around 67% of the 2.96 billion monthly active users (MAUs). MAUs increased by 51 million, or 2%, over the previous year.
According to Zuckerberg, reel plays on Facebook and Instagram have more than quadrupled in the last year, while the social component of users resharing Reels on both platforms has more than doubled in the previous six months.
The majority of Meta’s revenue comes from advertising, and there appears to be some improvement in fourth-quarter advertising revenues compared to the previous three quarters, though it remains under pressure from weak advertising demand, which, according to Meta, is still being impacted by the uncertain and volatile macroeconomic landscape.
The business anticipates overall sales in the first quarter of 2023 to be in the $26-28.5 billion range. It also expects overall spending in 2023 to be in the $89-95 billion range, down from its previous estimate of $94-100 billion
Stock buyback: Meta Has A Difficult Year
The results news follows a rough year for Meta, which revealed intentions to shed 11,000 positions in November. The layoffs affect 13% of Meta’s personnel. Furthermore, Meta’s $40 billion rise in share repurchases follows almost $28 billion in repurchases in 2022.
Meta also claims to have hit a significant milestone. “Our community is expanding, and I’m thrilled with the high level of participation across our applications. Facebook recently passed the 2 billion daily activity mark “In a written announcement, Zuckerberg remarked. Analysts predicted $1.99 billion.
Meta, like other social media businesses such as Snap (SNAP), Etsy (ETSY), and Pinterest (PINS), is being tested not just by macroeconomic weakness but also by a sharp reduction in digital advertising, which provides for nearly all its income.
Further evidence of these difficulties emerged in Snap’s fourth-quarter financial release, which was slammed following poor results. Snap shares fell roughly 10.3% to end at 10.37 on Wednesday.
Stock buyback: Meta Stock Addresses Privacy Modifications
Meta lost about $10 billion in ad income last year after Apple (AAPL) updated iPhone privacy regulations. This update makes it more difficult to precisely target consumers with adverts. However, the corporation achieved technological advancements with its ad campaign approach.
Credit Suisse analyst Stephen Ju predicted “gradual improvements to Meta’s revenue dollar growth” in a note to clients. Meta also intends to invest billions of dollars in the creation of the so-called metaverse.
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