Meta Platforms, owner of Facebook and Instagram, reassured Wall Street that its sales were holding up better than feared last night after its profits more than halved in the past quarter.
The world’s largest social media business said revenues may return to growth this quarter, allaying worries over its prospects as advertisers batten down the hatches and cut back spending.
Shares in the group rallied 19 per cent to $182.15 in out-of-hours trading in New York last night.
Net income fell 55 per cent to $4.65 billion in the three months to the end of December — missing analysts’ expectations by some $1.3 billion, according to Refinitiv — as it grappled with a decline in ad sales and reported a $4.2 billion hit from its efforts to cut costs. Revenue dropped for the third consecutive quarter, by 4 per cent to $32.2 billion.
But Meta, which also increased its share repurchase scheme by $40 billion, forecast total sales of between $26 billion and $28.5 billion in the first quarter. The top end of this guidance would amount to growth of more than 2 per cent.
Based in Menlo Park, California, Meta was founded by Mark Zuckerberg, its chairman and chief executive, in 2004. The company has 3.74 billion monthly active users across its platforms, which also include WhatsApp. It has 86,482 staff.
“Our community continues to grow and I’m pleased with the strong engagement across our apps,” Zuckerberg, 38, said last night, noting that Facebook now has more than two billion daily active users. Efficiency is Meta’s theme this year, he added. “We’re focused on becoming a stronger and more nimble organisation.”
The business laid off more than 11,000 staff last autumn as the wider technology sector scrambled to cut costs amid heightened fears of recession. Zuckerberg said that he — like many Silicon Valley executives — had mistakenly believed the digital retailing boom unleashed by the pandemic was permanent. This restructuring led to charges of $4.2 billion in the last quarter, it reported yesterday.
Meta found itself on the sharp end of the tech rout last year, losing two-thirds of its stock market value in the face of concerns over the weakening advertising market; growing competition from rival platforms such as TikTok, the short-form video app; and the group’s heavy investment in virtual reality. Apple’s privacy changes also disrupted the business models of some social networks by limiting advertisers’ ability to collect data on users of devices such as iPhones for targeted advertising.
While the vast majority of Meta’s revenue is generated through adverts on its social networks, the group changed its name from Facebook in 2021 to reflect its focus on the metaverse, a virtual realm deemed by many in Silicon Valley to be the internet’s next frontier.
With Meta’s founder now largely concentrating on building the metaverse, Sir Nick Clegg, the company’s president for global affairs, and Britain’s former deputy prime minister, has been dispatched to handle controversial issues that arise from its social media platforms. Last week he announced the Facebook and Instagram accounts of Donald Trump would be reinstated after a two-year suspension.