Facebook’s parent Meta shares rose 20% to $184 a piece after hours as the company reported fourth-quarter revenue of $32.17 billion that beat expectations for $31.53 billion estimated by Refinitiv.
Despite beating expectations, revenue in the final quarter of 2022 fell 4% from a year earlier, marking its third straight quarter of declining sales as cost and expenses soared 22% to $25.8 billion. The social media platform said that it expects revenue in the first quarter this year to be between $26 billion to $28.5 billion. Meta could record its fourth straight quarterly decline if sales fall to the lower range. Meanwhile, the market consensus expected sales of $27.1 billion, according to Refinitv.
Meta CEO Mark Zuckerberg said in a statement that Meta’s community continues to grow and he is pleased with the strong engagement across its apps.
The CEO labeled 2023 as ‘Year of Efficiency’ as the company will focus on cost control after years of overspending.
The firm said that its headcount rose 20% YoY as of December 31, 2022.
Facebook’s parent revised its guidance on total expenses for 2023, expecting to be in the range of $89 billion to $95 billion, which is lower than its prior forecast of $94 billion to $100 billion.
Investors will mostly focus on Meta’s Reality Labs that Zuckerberg invested heavily on metaverse technologies, expecting it to be the future of the company.
According to the financial statement released by Meta on Wednesday, Meta’s Reality Labs which develops Zuckerberg’s metaverse technologies announced a $4.28 billion operating loss in the fourth quarter, while recording a total of $13.72 billion operating loss of the year. The Labs only generated $727 million in the final quarter and $2.16 billion in revenue for the year.
Zuckerberg changed the company’s name from Facebook to Meta Platform in 2021 with his envision to introduce a digital universe to the world.
Note that the Reality Labs generated more loss than what it gained, its sales only accounted for 2% of Meta’s total revenue.
In the meantime, Meta said on Wednesday that it authorized a $40 billion increase to its stock buyback program. The company purchased $27.9 billion worth of its shares last year under the program.
The share price of Meta Platform plunged more than 60% in 2022 as the company struggled to sell its dream of a developing digital life in the metaverse to investors.
As the company is moving toward cost-control program, it might be difficult for the Reality Labs to continue developing Metaverse when it had been building a big pile of loss as of late.