2022 has not been a good year for Meta. The company founded and directed by Mark Zuckerberg accumulated three consecutive quarters with income below expectations because of the bad global economic situation, their expensive investment in the metaverse and the difficulties they are facing because of companies like Apple, which has considerably limited its advertising business, or platforms like TikTok, which compete strongly against Facebook or Instagram.
During the third quarter of 2022For example, the company reported a year-on-year drop in revenue of 4%, while net profit fell by as much as 52% compared to the same period last year. This caused Meta shares to plunge by as much as 25% after the announcement. Everyone left her for deaddespite the fact that since then the multinational has taken drastic measures internally, such as the layoffs of thousands of employees.
After presenting the results of the fourth quarter, however, Meta shares have skyrocketed 20%, despite the fact that the company has also reported lower income than it had a year ago. The latest financial report, in fact, reveals that they have obtained 32,165 million dollars in income during the last three months of their fiscal year; 4% less compared to the same period of the previous year. The net profits, in addition, have suffered a year-on-year drop of up to 55%, standing at 4,652 million dollars.
So, if the results of this last quarter are also apparently negative, What has happened to make Meta’s shares soar?
Meta has fallen in revenue less than expected
One of the keys is in the improvement compared to analyst forecasts. It was expected that this fourth quarter the company’s revenues will be around 31,500 million dollars. Instead, they have been 32.165 million dollars.
Something similar happens with your advertising revenues, which have improved slightly compared to analysts’ expectations, reaching an actual 31.6 billion dollars against an expected 30.86 billion dollars. The number of daily active users (DAU) in the different social networks of the firm has also exceeded expectations. Meta has announced 2.96 billion users against the expected 2.92 billion.
Where there are no improvements is in the cost of Reality Labs, the division of Meta dedicated, among other things, to the development of the metaverse and virtual reality devices. Analysts had expected a loss of $3.99 billion in this area. Instead, it has been 4.8 billion dollars. The adjusted earnings per share (EPS), on the other hand, have settled at $1.76 versus $2.06 expected.
“The year of efficiency”
These results, however, have not been an impediment for Zuckerberg when it comes to regaining investor confidence. The CEO of Meta, in fact, seems to have convinced them with his strategy for this year. He claims, specifically, that the “management theme” of this 2023 is the ‘Year of Efficiency’.
Proof of this are the 11,000 layoffs that the company has made in recent months as part of a strategy to save costs. Although this decision has had a negative impact on the results of this last quarter, since the company has spent thousands of dollars for compensation, it is a measure that, without a doubt, will allow it to save a large amount of money in the future.
Meta, on the other hand, has stated that they are working on methods to “deliver” on your roadmaps by reducing capital expenditures, and hopes to “eliminate some layers of middle management” in order to make decisions more quickly. Among other strategies to improve efficiency within the company is the use of AI tools to help engineers “be more productive.”
“We are going to be more proactive in cutting projects that are not performing or are no longer as crucial.”
Mark Zuckerberg, CEO of Meta, on the call after the results of the four quarters of 2022.
This, however, it doesn’t mean that Meta is reducing its interest in the metaverse. The company, in fact, has highlighted that, together with artificial intelligence, it is one of its main priorities. “Our priorities have not changed since last year. The two main technological waves driving our roadmap are AI today and, in the longer term, the metaverse”, said the CEO of Meta.
