Meta shares jumped on Wednesday after the social media company’s sales for the final quarter of 2022 came in better than expected and it authorised an additional $40bn in share buybacks.
Meta, which owns Facebook, Instagram and WhatsApp, reported revenues of $32.2bn, a 4 per cent decline from the year before but at the top end of its guidance. It was also slightly above analysts’ estimates of a drop to $31.7bn.
The company also announced an additional $40bn for share buybacks. Meta shares jumped about 18 per cent in after-hours trading.
However, its profits took a substantial knock in the fourth quarter due to billions of dollars of restructuring costs as it seeks to wrestle its finances under control during an advertising slump and rising impatience from investors over its costly metaverse bet.
Net income in the fourth quarter dropped 55 per cent to $4.7bn, compared with consensus estimates for a drop to $6bn, according to S&P Capital IQ. Meta blamed a restructuring cost of $4.2bn in the quarter related to facilities consolidation, job cuts and the cancellation of multiple data centres.
Meta, which expanded its headcount rapidly since the start of the coronavirus pandemic, has sought to bring down costs as Wall Street has increasingly questioned its lossmaking efforts to build an avatar-filled digital world known as the metaverse. As with its many other virtual and augmented reality projects, they are not expected to generate returns for many years.
It has also been squeezed by the economic slowdown, which has prompted marketers to cut their spending, along with heightened competition from TikTok and challenges in tailoring and measuring ad campaigns following Apple’s privacy changes.
In November, Meta announced its biggest headcount reductions, dismissing 11,000 staffers, or about 13 per cent of total employees. It also introduced other measures such as reducing budgets and employee perks, and shrinking its “real estate footprint”.
Source: Financial Times
