Meta stock price rises on earnings beat and optimistic forecast

Meta, the parent company of Facebook, saw a 17% increase in its stock price during the extended trading session on Wednesday after the internet giant surpassed Wall Street’s revenue and user growth forecasts.

In addition to its optimistic outlook for the first quarter, Meta also stated that it anticipates lower-than-anticipated expenses for the full year. For this reason, investors are not counting for Meta to continue growing at its previous dizzying rate.

Revenue for Meta was down 4% year over year, but it was in line with expectations, therefore the stock market reacted pleasantly. Shareholders will likely approve of Meta‘s $40 billion stock repurchase announcement.

The business announced in December that it had hit 2 billion daily active users across all of its programs, including Facebook, Instagram, and WhatsApp, which drove the news. Sixty-seven percent of its 2.9 billion monthly active users access at least one of its apps on a daily basis.

According to these numbers, Meta is the most popular social media platform worldwide, despite facing its most difficult year of business to date in 2022. Details: Meta stated that it would incur $4.2 billion in restructuring charges during the fourth quarter, and that it anticipates spending an additional $1 billion on restructuring expenses during the year.

Severance payments to fired workers and early termination fees for office leases were cited as the primary causes of those expenditures. Hidden meanings: The virtual and augmented reality sector of the company continues to be a major source of losses.

The $4.27 billion in losses that Reality Labs incurred during the most recent quarter brought the company’s annual losses to $13.71 billion. Last year, the division brought in $2.15 billion, down from $2.27 billion the year before.

Use your brain: Given that on Tuesday, Meta’s main competitor, Snap Inc., informed investors that it anticipates sales to decrease by between 2 and 10 percent in the first quarter, the company’s bullish estimates for first-quarter revenue are a noteworthy update.

In the big picture, the company’s earnings report on Wednesday will put an end to a yearlong losing skid on Wall Street. In 2022, Meta’s stock price fell by over 70%. While investors were concerned about the company’s ability to recoup the costs of its substantial investments in metaverse construction, a slowdown in the advertising market was also a factor.

What to keep an eye on: Meta appears to be putting more of a focus on AI as a way to improve its already successful advertising-based social media and messaging business. Mark Zuckerberg, CEO of Facebook, stated on a conference call with investors on Wednesday that he wants Meta to become a leader in generative AI and that the company plans to utilize the technology to generate images, films, avatars, and 3D assets across all of its platforms.

“I believe that our concept of developing these consumer products, emphasizing distribution to hundreds of millions or billions of users, and then concentrating on revenue is the correct one. It was really useful to us “What he had to say was.

“We intend to maintain this practice moving forward with all of our projects, including the next generative AI products and the metaverse initiatives. We plan to employ the same strategy there as well.”