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A decline in the online advertising industry and competition from rivals like TikTok impacted Facebook parent firm Meta’s fourth-quarter profit and sales on Wednesday.
However, the shares of the corporation rose during extended trading as its sales above Wall Street’s low forecasts and the Menlo Park, California-based business disclosed a $40 billion stock repurchase.
The software juggernaut has experienced a fall in sales for three quarters running. In November, it let go of 11,000 employees, or around 13% of its staff. CEO Mark Zuckerberg attributed the layoffs to aggressive recruiting during the epidemic, when Meta’s company grew as a result of people being stranded at home and addicted to social media while browsing on their phones and laptops. However, once the lockdowns ended and people resumed venturing outdoors, the rise of revenue slowed.
In a statement issued on Wednesday, Zuckerberg stated, “(Our) management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on making a stronger and more agile corporation.”
Investors’ worries about the company’s investment in the “metaverse,” an immersive digital world viewed through a headset that Zuckerberg expects will ultimately displace cellphones as the major way people use technology, seemed to be allayed by Meta’s massive stock repurchase.
According to Meta, it made $4.65 billion, or $1.76 per share, in the last quarter of 2022. This is a 55% decrease from the $10.29 billion, or $3.67 per share, reported a year ago.
In a FactSet survey, analysts projected profits of $2.26 per share.
In the UK, Mark Zuckerberg, the CEO of Meta, may be charged with a crime if the legislature ultimately passes a rigorous internet safety law.
From $33.67 billion to $32.17 billion, revenue decreased by 4%. Analyst predictions called for $31.55 billion.
Meta saw its first year-over-year sales fall at the end of 2022, down 1% from 2021.
Insider Intelligence analyst Debra Aho Williamson said, “The drop was significantly smaller than we expected it would be, but that’s not always a positive indication.” She said that compared to 2021, when the company’s global revenue increased by 37%, Meta’s 2022 figures were “a striking divergence.”
“The current struggle is to go back to a positive place. Facebook and Instagram, Meta’s two main platforms, need to be stabilized, she continued. “Mark Zuckerberg is going to have to confront an inconvenient reality: Virtual worlds are just not what businesses or consumers want right now,” the article said. “And with losses at its VR division rising.”
In comparison to a loss of $3.3 billion a year earlier, Meta’s Reality Labs division, which comprises its virtual and augmented-reality products, such as its headsets, as well as software and related content, reported an operational loss of $4.28 billion in the fourth quarter.
Despite a reduction in income, Meta kept adding subscribers to its social networking platforms. For the first time, Facebook reached 2 billion daily active users, an increase of 4% over the previous year. At the conclusion of the year, Facebook had 2.96 billion active users per month. As of December 31, 3.74 billion people were using the “family” of applications that Meta refers to as Instagram, Facebook, WhatsApp, and Messenger on a monthly active basis.
Shares of Meta increased by nearly 19% in after-hours trading. The stock had decreased by 52% over the previous year when it concluded the regular trading session at $153.12.
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