Share of Meta
surged by nearly 20% in pre-market trading on Thursday as Facebook’s parent
company’s fourth quarter earnings beat analysts’ estimates on Wednesday.
Meta CEO Mark
Zuckerberg disclosed that the social-media giant will make 2023 the “year of
efficiency” — and signaled that more layoffs could be in the offing as Wall Street reacted
positively to news that the company would initiate $40 billion
worth of share buybacks.
Zuckerberg
said that the company “may incur additional restructuring charges as we
progress further in our efficiency efforts,” with the company saying they could
total $1 billion this year.
“We
closed last year with some difficult layoffs and when we did this, I said
clearly that this was the beginning of our focus on efficiency and not the
end,” Zuckerberg said. adding that further layers of middle management could
still be trimmed.
Meta
said it spent around $3.7 billion last year in paying out severance as well as
terminating office leases.
In November, Meta laid off more than
11,000 employees — or 13% of the company’s overall workforce.
Zuckerberg blamed aggressive hiring during the pandemic, when Meta’s business
boomed because people were stuck at home, scrolling on their phones and
computers, glued to social media.
But
as the lockdowns ended and people started going outside again, revenue growth began to
falter.Meta’s
stock price slid by some 70% last year as the company has struggled to smoothly
pivot from its traditional, bread-and-butter business model of ad-driven social
media to advancing the metaverse.
“Our
management theme for 2023 is the ‘year of efficiency’, and we’re focused on
becoming a stronger and more nimble organization,” he said.
Quarterly
revenue fell 4% year-over-year to $32.17 billion — besting forecasts for $31.55
billion. The company also reported earnings per share of $1.76 — missing
estimate targets of $2.26 a share. Meta projected that its first quarter
revenue estimates would range somewhere between $26 billion and $28.5 billion —
surpassing analyst estimates.
Meta ended 2022
with a 1% revenue decline from 2021 — its first year-over-year drop.
Reality Labs,
the virtual reality division of Meta responsible for developing Zuckerberg’s
metaverse vision, reported an operating
loss of $4.28 billion — beating analyst estimates of $4.36
billion.
The division
generated revenue of $727 million in the fourth quarter — surpassing forecasts
of $715.1 million. Nonetheless, Reality Labs continues to be a money-loser for
the company. In 2022, the division’s operating loss totaled $13.72 billion.
Though revenue
declined, Meta continued to add users on its social media apps. Facebook’s
daily active users hit 2 billion for the first time — up 4% from a year
earlier.
Facebook had
2.96 billion monthly active users at the end of the year. Meta’s monthly active
users on what it calls its “family” of apps — Instagram, Facebook, WhatsApp and
Messenger — were 3.74 billion as of Dec. 31.
