Facebook owner Meta's shares up 14% after profits triple in 'year of efficiency'
Meta Platforms Inc., the parent company of Facebook and Instagram, has seen a massive increase in profit and revenue in the last quarter of 2023.
This is due to a surge in digital advertising and cost-cutting measures, including layoffs, in what CEO Mark Zuckerberg has dubbed the "year of efficiency." Longtime tech analyst Debra Aho Williamson commented: "The company can talk all it wants to about AI and the metaverse, but it's still a social media company that gets nearly all its revenue from advertising, and advertisers still clearly love Meta."
The California-based firm announced on Thursday that it made a whopping $14 billion, or $5.33 per share, in the October-December period. This is a significant increase from $4.65 billion, or $1.76 per share, the previous year. Revenue also saw a boost, growing 25% to $40.11 billion from $32.17 billion.
Analysts were expecting earnings of $4.82 per share on revenue $39.1 billion, according to FactSet Research. In a statement, Meta said: "This was a pivotal year for our company.
"We increased our operating discipline, delivered strong execution across our product priorities, and improved advertising performance for the businesses who rely on our services."
Apple TV release MLS Season Pass worldwide and announce free opening weekend
The user base of Meta's apps, which include Facebook, Instagram, Messenger and WhatsApp, also grew. Monthly active users reached 3.98 billion at the end of the year, up 6% from 2022. Facebook, now known as Meta, has reported a 3% increase in monthly active users, reaching 3.07 billion by the end of December.
However, the company does not provide separate user data for its other platforms. The impressive results were announced just a day after CEO Mark Zuckerberg faced questioning from the Senate about the potential harm social media can cause to children.
Looking ahead, Meta predicts revenues between $34.5 billion and $37 billion for the next quarter, surpassing Wall Street's expectations. Analysts had previously forecasted revenues of $33.9 billion for the first quarter.
Despite laying off thousands of employees last year, reducing its workforce by 22% to 67,317, Meta plans to increase payroll costs this year. The tech giant aims to hire more highly-paid AI specialists to compete with other industry leaders.
In a first for the company, Meta will pay a quarterly dividend to its shareholders. A payment of 50 cents per share will be made on March 26 to those recorded as shareholders on Feb. 22. The company intends to continue this practice moving forward.
Meta's Reality Labs segment, which includes virtual reality headsets and augmented reality technology, saw a revenue increase of 47% to $1.07 billion. Despite this, the company reported an overall loss of $4.65 billion for the quarter.
Insider Intelligence analyst Jasmine Enberg commented on Meta's AI investments, saying they "demonstrate the company's commitment to becoming an AI heavy-hitter-something investors and advertisers will reward." She added: "Meta still faces the big task of proving that it can integrate AI with its other big bet, the metaverse," and warned that a pullback from Chinese advertisers could impact its ad business.
After these announcements, Meta's shares jumped $55.52 or 14.1%, to $450.28 in after-hours trading. The stock had closed at $394.78, up 1.2%.
* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]
Read more similar news:
Comments:
comments powered by Disqus
