Meta stock spikes despite falling earnings, as Facebook hits 2 billion users for the first time, and sales guidance quells fear
Shares of Meta Platforms Inc. jumped in after-hours trading on Wednesday despite falling short in earnings, as Facebook’s parent company gave guidance on the possibility of higher-than-Wall Street revenue expected in the new year and promised promises to buy back more shares amid cost-cutting.
meta
META,
speak it pulled in $32.17 billion in revenue in the fourth quarter, down from $33.67 billion a year ago but stronger than expected. Earnings were $4.65 billion, or $1.76 a share, compared with $10.3 billion, or $3.67 a share, last year.
Analysts polled by FactSet expect Meta to post fourth-quarter revenue of $31.55 billion with earnings of $2.26 a share and a sales beat. coincided with sales forecasts that also met or exceeded expectations. Facebook CFO Susan Li expects first-quarter revenue of $26 billion to $28.5 billion, while analysts on average predict first-quarter revenue of $27.2 billion. la.
Shares jumped more than 18% in after-hours trading shortly after the announcement of the results, after closing with a 2.8% gain at $153.12.
Alphabet Inc.
GOOGL,
Google and Pinterest Inc.
pin code,
benefited from Meta’s results, with shares of each company up 4% in extended trading on Wednesday.
“Our community continues to grow and I am pleased with the strong engagement on our apps. Facebook just hit the 2 billion daily activity mark,” Meta CEO Mark Zuckerberg said in a statement announcing the results. “The progress we are making on our AI discovery engine and Reels is a major driver of this. In addition, our management theme for 2023 is the ‘Year of Performance’ and we are focused on becoming a stronger and more resilient organization.”
Read more: Snap suffers worst sales growth in holiday quarter, stock plunges after earnings miss
Facebook’s 2 billion user milestone was slightly better than analysts expected in terms of user growth on Meta’s core social network. Daily active users across all of Facebook’s apps were close to hitting another round number, but failed to peak, at 2.96 billion, up 5% from a year ago.
Meta has navigated difficult advertising waters as it copes with growing competition from TikTok and the fallout from changes in Apple Inc.
APL,
ad tracking system in 2021 has severely harmed Meta, costing it billions of dollars in ad sales. Meta has invested heavily in artificial intelligence tools to improve its ad targeting systems and offer better recommendations to users of its Short Video Product Stories, but it lay off thousands of workers after profits and revenue shrank in recent quarters.
The cost-cutting appeared to have paid off on Wednesday. Although Facebook missed out on its earnings, it noted that the cost of layoffs and other restructuring activities amounted to $4.2 billion and reduced this figure by about $1.24. stock.
Meta executives say they now expect operating costs to be $89 billion to $95 billion this year, down from previous guidance of $94 billion to $100 billion dollars. Capital expenditures are expected to be $30 billion to $33 billion, down from the previous guidance of $34 billion to $37 billion, as Meta cancels multiple data center projects.
“The declining outlook reflects our updated plans for lower data center construction spending in 2023 as we transition to a new, more cost-effective and scalable data center architecture.” supports both AI and non-AI workloads,” said Li in his commentary on his outlook included in the release.
Meta hopes to increase spending on its own stocks. The company’s board of directors approved a $40 billion increase in its share repurchase authorization; Meta spent nearly $28 billion on its own stock in 2022, and still has close to $11 billion available to buy back before going up.
“Investors are cheering Meta’s plan to return more capital to shareholders despite concerns about rising costs associated with it,” said Jesse Cohen, senior analyst at Investing.com. its metaverse spending.
The results came a day after Snap Inc.
SNAP,
posted fourth-quarter revenue of $1.3 billion, unchanged from a year ago, and the worst year-over-year revenue growth Snap has ever reported. But they also came on the same day Facebook won its big win in a California court. The company successfully resisted a Federal Trade Commission bid to win a preliminary order blocking Meta’s planned acquisition of VR startup Inside Unlimited.
Read more: Meta wins bid to buy VR startup Inside Unlimited, beats US FTC in court: report
Meta stocks have fallen 53% over the past 12 months, while the broader S&P 500 index
SPX,
has decreased by 10% in the past year.
