Meta shares soar after sales beat estimates, rosy forecast as Facebook grows

San Francisco – Meta Platforms posted quarterly sales that topped estimates, gave a rosy revenue forecast and indicated Facebook and Instagram still have room to grow, signalling it is on course for a turnaround after its most difficult year.

The company’s shares jumped more than 18 per cent in extended trading after fourth-quarter sales beat estimates, fuelled by stronger advertising demand and more users for its major social networks.

To build a more resilient company, Meta is working to become more efficient, more profitable and nimbler at developing new products, according to chief executive Mark Zuckerberg.

“We are working on flattening our org structure and removing some layers of middle management to make decisions faster, as well as deploying AI (artificial intelligence) tools to help our engineers be more productive,” he said on an earnings call with investors. “There is going to be some more that we can do to improve our productivity, speed and cost structure.”

The company is recovering from the worst year for its stock in history. Meta faced a decline in advertiser demand due to weakness in the broader economy as well as a change in iPhone privacy rules that made it harder for Meta to offer targeted ads.

Meta cut 11,000 jobs

or 13 per cent of the workforce in November in its first major layoff.

Those cuts came during a quarter that was otherwise an improvement for the company. Revenue was US$32.2 billion (S$42 billion), compared with the average Wall Street estimates of US$31.6 billion, according to a Bloomberg survey. Meta is making progress with its investments in AI, particularly for improving the videos it shows users on Facebook and Instagram.

Facebook, Meta’s flagship social network, now has more than two billion daily users, up more than 70 million from a year ago.

Meta also projected revenue of US$26 billion to US$28.5 billion for the first quarter, in line with estimates of US$27.25 billion. The company also boosted its stock buyback authorisation by US$40 billion, adding to the US$10.9 billion remaining from previous repurchase programmes.

Meta said 2023 expenses will be less than previously forecast. Expenses for the year will be US$89 billion to US$95 billion. That could help lessen investor concerns that the company is overspending on its virtual reality ambitions.

Mr Zuckerberg has spent tens of billions of dollars on

an attempt to build the metaverse

– a digital world where people can work and play. Those efforts are still in their early stages, which means much of the investment is not leading to immediate returns.

Capital expenditures in the recent quarter soared to US$32 billion. In the fourth quarter of 2021, by contrast, capital spending was US$5.54 billion. bloomberg