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Meta stocks surge on resilient earnings and $40 billion buybacks

Mark Zuckerberg plans to keep Meta’s costs more under control in what he considers to be the “Year of Efficiency” for social media companies. A new $40 billion share buyback sent the stock soaring. .

metaOwn Facebook, Instagram and WhatsApp.

The company also reduced its 2023 expense outlook by $5 billion and announced an additional $40 billion in share repurchases.

Meta shares were up about 19% in premarket trading on Thursday. If that profit holds up, its market value would increase by about $76 billion, according to Bloomberg data, amid investor fears over costly bets on the Metaverse. It would significantly overturn an $89 billion hit.

Fourth quarter results were down over the past year due to a slowing economy that forced marketers to cut back on spending, increased competition from TikTok, and challenges in coordinating and measuring advertising campaigns with Apple’s privacy changes. It shows a brighter picture for Meta. .

Still, profits for the quarter were significantly lower. This was due to his $4.2 billion restructuring charges in the quarter related to facility consolidation. Staff reduction Decommissioning of multiple data centers. Fourth-quarter net income fell 55% to $4.7 billion, down from consensus estimates to $6 billion.

At the beginning of a conference call with investors, an upbeat Zuckerberg said, “The operating theme for 2023… is the year of efficiency.” We focus on reducing underperforming projects and deploying artificial intelligence tools to increase engineer productivity.

“There are still some things we can do to improve our productivity, speed and cost structure,” Zuckerberg said. “2022 was a challenging year. I think we have made good progress on these priorities and set ourselves up for a better result this year.”

Meta has expanded its workforce rapidly since its inception. coronavirus pandemichas been trying to cut costs as Wall Street increasingly calls into question its deficit efforts to build an avatar-filled digital world known as the Metaverse.

Like many other virtual and augmented reality projects, they haven’t been expected to turn a profit in years. The loss was $4.3 billion, down from $3.3 billion a year earlier, although it decreased from $77 million to $727 million.

In November, Meta announced its largest layoff, laying off 11,000 staff, or about 13% of its total workforce. It has also introduced other measures, such as cutting budgets and employee benefits, and reducing its “real estate footprint.”

On Wednesday, the company forecast revenue of $26 billion to $28.5 billion for the quarter. It also expects 2023 expenses to range from $89 billion to $95 billion, up from its previous forecast of $94 billion to $100 billion, as “anticipated slowing growth in payroll and revenue costs.” doing.

The company expects an additional $1 billion in restructuring costs, down from its previous estimate of $2 billion.

During a conference call with analysts, Zuckerberg said the company’s investment in AI has paid off, allowing it to recommend more relevant short-form video content to users for its so-called Reels feature, automating brands, He said he can now help improve targeting and measurement. their marketing campaign.

He also said he hopes Meta will be a “leader” in generative AI, a rapidly emerging technology that can be used to create novel content such as graphics and literature. . Zuckerberg said, “We have a lot of things to launch this year.

Meta’s growing user base also continued to be a bright spot. Monthly active users for one or more apps increased 4% to 3.74 billion in Q4, while Facebook app users notably increased 2% to 2.96 billion.

UBS analyst Lloyd Walmsley said he sees a path to double digits. [revenue] growth will be realized by the end of 2023, with strong earnings per share growth. “These results are a major overhang and … in our view, the stock is under-owned by long-term investors.”

Additional reporting by Nicholas Megaw

https://www.ft.com/content/c90c3700-eeca-419d-bd1d-8758142b17b7 Meta stocks surge on resilient earnings and $40 billion buybacks

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