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Meta Explodes After Earnings Beat

Meta Explodes After Earnings Beat! Facebook and Instagram Users Increase By 70 Million.

Meta Platforms Inc. reported quarterly sales that surpassed expectations, with a positive outlook for upcoming revenues, suggesting that Facebook and Instagram still have potential for expansion. This signals that the company is on track to bounce back from its most difficult year. The firm's stock rose more than 18% in extended trading, spurred by stronger advertising demand and higher numbers of users for its primary social networks. CEO Mark Zuckerberg is aiming to make Meta more productive, profitable and agile in creating new products as part of creating a resilient business.

On an earnings call with investors, the Zuckerberg said they are streamlining their organizational structure to increase decision-making speed and deploying AI tools to enhance productivity. Additionally, they mentioned that there is more to be done to advance their productivity, speed, and cost structure. This comes in the wake of the most difficult year in the company's history, as advertisers have experienced a slump in demand due to the current global economic climate and Apple's new iPhone privacy rules have posed a challenge for targeted ads. In response, Meta has chosen to reduce its workforce by 11,000 people, or 13%.

Despite the cuts in the quarter, Meta saw an overall improvement with revenue of $32.2 billion, which exceeded the average Wall Street forecast of $31.6 billion (as reported by Bloomberg). Meta is making strides in its investments in Artificial Intelligence, particularly in terms of enhancing the videos it displays to users on Facebook and Instagram. This has resulted in an impressive 70 million increase in users from the same period a year ago, giving the social media platform a total of over 2 billion daily users.

Furthermore, Meta boosted investor confidence by increasing its share repurchase authorization to a total of $50.9 billion or an increase of just over 78% from previous stock buyback programs. According to the Meta Earnings Presentation in Q4 2022, the company’s capital expenditure was $9.22 billion during the last quarter of 2022 which was a significant increase over the same period in 2021 when CAPEX was $5.54 billion. While Zuckerberg plans to continue developing the metaverse – a virtual reality to work and play – he eased investor worries by indicating that the company’s expenses in 2023 will be lower than initially forecast ranging from $89 billion to $95 billion.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.