Meta shares soar despite the ad sag as investors seize on its “year of efficiency”
Zuck bucks turn up… Meta shares popped 23% on Wednesday after the social giant reported earnings , making yesterday its second-best trading day in nearly a decade. Disillusioned investors were pleasantly surprised by Meta’s quarterly revenue — and its plans to buy back $40B of its own stock. Despite a widespread ad pullback, Meta fared better than feared:
Sales were down 4% from a year earlier, declining for the third straight quarter as its average ad price fell 22%. But Meta had a surprisingly upbeat forecast for this quarter, saying that revenue has a chance of rising from last year.
Profit plunged 55% year over year as expenses ballooned, but was up from the previous quarter (snapping a three-quarter streak of declines).
Daily active users across Meta’s “family of apps” (FB, Insta, WhatsApp, and Messenger) jumped 4% to 2B. Monthly users hit 3.7B (nearly half of all humans).
Reel it in… Ad-reliant companies like Meta, Google, and Snap face many of the same headwinds: a pullback in digital-ad spending, hot competition from TikTok, and the continued fallout of Apple’s ad-targeting privacy change. Snap stock plunged after it disappointed on sales and guidance. But investors were optimistic about Meta’s cost-cutting future:
- Zuck said 2023 is “the year of efficiency” for Meta. It expects to spend less this year, after slashing 11K+ employees in November (it’s also cutting data-center spend).
Cutting down can mean leveling up… Meta used to be synonymous with “growth at all costs,” but its latest earnings call sounds more like “efficiency at all costs.” That could mean focusing less on investments in its underperforming metaverse biz, which lost nearly $14B last year, and lasering in on investments like AI recommendations and TikTok rival Reels, which fueled engagement last quarter.