Profits fall 55% at Facebook owner Meta, but shares rise 18% on upbeat first-quarter earnings outlook
Facebook owner Meta announced a 55% drop in profits last night as it closed a tumultuous year in which its share price plummeted.
It was the company’s first earnings report since announcing 11,000 layoffs last November.
But shares jumped 18% in after-hours trading on an upbeat outlook for first-quarter earnings.
The social media giant, which also owns Instagram and WhatsApp, said its profits fell to £3.8bn in the fourth quarter from £8.3bn a year earlier.
Net profit was hit by £3.4billion of restructuring charges linked to the decision to lay off staff and close some of its offices – and Meta warned of additional costs of £800million or more to come this year as “efficiency efforts” gather pace. .
Slump: Facebook owner Meta announced 11,000 layoffs last November and then boss Mark Zuckerberg (pictured) was forced to admit ‘I was wrong’
Revenue in the quarter recorded a third consecutive decline, of 4%, to £26bn.
Meta said that for the current first quarter, they are expected to reach £23 billion, which is above market expectations.
This seems to suggest a rebound in demand for digital ads after months of weak sales.
Investors were hoping for signs of recovery after a horrific 2022 when Meta saw its stock price plunge by more than two-thirds.
Shares had already climbed 27% before last night so far this year. Markets were also buoyed by a £32 billion share buyback by the company.
Meta, like other tech giants, fared well during shutdowns when households spent more time online where advertisers sought to target them.
But with the world reopening and a downturn looming, ad budgets are facing a squeeze.
At the same time, soaring U.S. interest rates last year hurt stocks of tech stocks, most of whose gigantic valuations were based on the earnings they were expected to generate in the future.
Higher rates make it less attractive to bet on such growth bets.
Tech companies including Microsoft, Amazon and Google-owner Alphabet have cut tens of thousands of jobs in recent months.
Meta said last fall it would cut the size of its workforce by about 13% in the first major job cuts in its history.
Boss Mark Zuckerberg said the economic downturn and increased competition were among the reasons his earnings were much lower than he had expected.
