Meta stock soared 15% in after-hours trading. The company’s strong fourth quarter results came a day after CEO Mark Zuckerberg was assaulted during a controversial Congressional hearing.
The company also announced that it would pay investors a dividend of 50 cents per share for the first time and authorized a $50 billion stock repurchase program.
Overall, Meta reported fourth-quarter revenue of $40.1 billion, beating expectations of $39.18 billion and increasing 25% year-over-year. The report comes as Meta, like many major technology companies, seeks to integrate artificial intelligence tools into its core products. In a statement accompanying the report, Zuckerberg said Meta was “a significant step forward in our vision of evolving AI and the Metaverse.”
“We anticipate that our ambitious long-term AI research and product development efforts will require increased infrastructure investment beyond this year,” the company’s press release said.
During last quarter’s earnings call, Zuckerberg touted Meta’s plans to invest in AI, saying it would be the company’s biggest investment area in 2024. Zuckerberg said in a video he shared on Instagram in early January that his company would acquire $9 billion worth of AI. Nvidia chips help scale up AI
Zuckerberg said AI will not only enhance ad campaigns and increase ad revenue, but AI will also be used to support new meta-products such as AI chatbots. Advertising revenue, the company’s core business, was $38.7 billion, compared with $31.25 billion in the same period last year. His Meta hardware products, such as the Quest 3 VR headset, still don’t account for a large percentage of the company’s revenue. Zuckerberg said on a conference call Thursday that he expects Meta to begin rolling out its AI services more broadly in the coming months.
Meta has laid off more than 20,000 employees in 2023 as it focuses on cost-cutting measures as part of what Zuckerberg has dubbed the “Year of Efficiency.” These efforts seem to have paid off, with Meta’s operating profit margin doubling from 20% in the same period of 2022 to 41%. Meanwhile, expenses decreased 8% year-on-year to $23.73 billion. Chief Financial Officer Susan Lee said on a conference call that Meta had more than 67,300 employees at the end of the fourth quarter, down 22% from a year ago, but that “hiring efforts have resumed. '', which resulted in a 2% increase from the third quarter.
Regulatory headwinds are probably top of mind for investors following Meta’s public taunts during Wednesday’s Congressional hearing. The hearing was convened to question Zuckerberg and other tech executives over the impact of their platforms on young users. The CEO expressed his condolences to the parents in the crowd who lost their children to online exploitation.
Throughout the hearing, lawmakers touted a bill that could strip Meta and other platforms of legal immunity for content posted on them, a move that would make Meta and other platforms illegal in 41 states over its impact on young users. It was enacted several months after a major lawsuit was filed by the attorney general. New Mexico’s attorney general also accused the company of failing to prevent child sexual exploitation and human trafficking.
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As a result of regulatory concerns, Meta has sought to diversify its core business, which has so far relied on advertising, which collects vast amounts of user data. Reality Labs, the division responsible for developing virtual reality products, faced a loss of $4.65 billion in the fourth quarter, up from $4.28 billion in the same period last year, bringing its total loss for 2023 to $16.1 billion. It reached $20 million. Meta said in a press release that it expects operating losses to “increase significantly year-over-year” as Reality Labs continues to expand its ecosystem.
In addition to regulatory concerns, Meta sees its platform’s user base tightening as young users in particular migrate to new platforms such as TikTok. The company said its platform is experiencing faster growth outside the United States. Insider information Principal Analyst Jasmine Enberg.
“On the usage side, Facebook continued to see a squeeze in user growth, but as expected, most of the new users came from outside of North America,” she said. “In the U.S., popularity among teenagers has become a liability in the eyes of lawmakers, which could hinder Facebook and Instagram’s efforts to grow in the country.”
Source: www.theguardian.com
