Price-boosting results: The meta is in great shape – Business AM
Quarterly results that convince investors: turnover exceeding estimates, increase in share buybacks, increase in the number of users… But there are few good things: terrible losses of the metaverse are piling up, advertising revenues are falling and costs are spiraling. .
Why is this important?After a disastrous 2022 in the stock market, Meta is recovering. The publication of the results does not create a bad surprise, as it happened several times in 2022. On the contrary, the stock is rising.
In the news : Meta results published on Tuesday.
- They have something to reassure shareholders. The results were announced after the close of trading, but the price rose more than 20% in after-hours trading. This already gives a trend for the evolution of the course during the next day.
- In 2022, the price lost more than 60%. But with a 72% gain since November and a 20% jump on Tuesday, it’s on the upswing. Since the beginning of the year, the stock has gained about 23%.
A sharp increase in annual profits
Numbers : decreased circulation.
- Fourth quarter net profit of $4.7 billion (up from $10,000 year-over-year), revenue of $32.17 billion (down 4% from the same quarter in 2021). This is the third quarter in a row that sales have fallen.
- But still a turnover that exceeded estimates.
- Another decrease: decrease in annual turnover. With -1% compared to 2021, the turnover of 2022, weighing 116 billion dollars, will go down in the history of the Meta group: this is the first decrease after the IPO. Annual profit increased by 23% and amounted to 87.7 billion dollars.
Details : by segment and what it means for the company (and the economy).
- Among all its apps, Meta had nearly 3 billion daily active users (+5%) during the quarter. Facebook has the largest share, 2 billion active users (+4%).
- The increase in users is good news for the group. About a year ago, he reported a decline in their numbers, which caused a bloodbath in the market. The group lost 232 billion in market value in one day, an all-time high on Wall Street. Its shares fell 26%.
- Reality Lab, an area involved in the development of the Metaverse, shows a loss of $4.279 billion. After a loss of more than $10 billion in 2021, the loss for the year adds up to more than $13 billion.
- This bet on the metaverse, which is still a massive losing segment, was also responsible for the price drop in 2022 as it failed to convince investors.
- Advertising revenue (which represents almost all of the group’s revenue) was down slightly from $32.64 billion to $31.25 billion in the same quarter of 2021.
- Expected decline: As interest rates rise, companies cut costs, and the first casualty is advertising.
- In November, Meta began laying off more than 10,000 people (13% of its workforce). But its workforce on December 31 was still 86,482, up 20% from a year earlier.
“Year of Efficiency”
In the future : a cost-cutting mission. A few predictions.
- Costs and expenses rose sharply to $25.8 billion in the quarter (up 22% compared to the same quarter in 2021).
- “Our management theme for 2023 is ‘The Year of Efficiency,’ and we’re focused on becoming a stronger, more agile organization,” said CEO Mark Zuckerberg.
- The group expects to spend between $89 billion and $95 billion in 2023, down from its previous estimate but slightly higher than in 2022 ($87.5 billion). The reason for this decline in valuation: “a slowdown in expected growth in wage costs and income.”
- Two predictions that helped boost the stock price : For the first quarter of this year, the group expects turnover between 26 and 28.5 billion dollars. If it exceeds 27.9 billion, it returns to growth.
- Meta also announces that it will increase its share buyback to $40 billion more than planned.