Meta stock rose 14%. Investors love its first-ever earnings

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Meta’s “year of efficiency” has paid off in a big way. It provided a surprise to investors, causing its shares to rise.

The tech giant reported Thursday that profits for the three months ended December increased more than 200% year over year to $14 billion, exceeding Wall Street analysts’ expectations. Sales for the quarter grew 25% compared to the same period last year to reach more than $40 billion.

The company also announced its first-ever cash dividend of $0.50 per share to be paid on March 26 to shareholders of record as of February 22, in addition to a $50 billion stock buyback. Buybacks and dividends help boost stock prices by rewarding investors with cash only for holding shares — but are widely criticized for artificially inflating the stock price without spending on employees or improving the underlying business.

The company said in a statement: “We intend to distribute cash dividends on a quarterly basis from now on.” launch.

News sent dead (dead) Shares rose more than 14% in after-hours trading on Thursday.

Thursday’s report marks the fourth quarter of Zuckerberg’s self-described “year of efficiency.” Announced in February From last year. The turnaround strategy included layoffs and other spending cuts in what ended up being a stunningly successful effort to reverse the previous year’s declining revenues and weak stock prices.

For the full year of 2023, Meta earnings rose 69% year-over-year to $39 billion, the company reported Thursday. As of the closing bell on Thursday, Meta stock was up 109% since this time last year.

Meta said Thursday that as of the end of 2023, it had “completed its data center initiatives and layoffs, and has substantially completed its facility consolidation initiatives.”

“Our communities are growing and our businesses are getting back on track,” CEO Mark Zuckerberg said on a call with analysts Thursday evening. “Thank you so much to all our employees, partners, shareholders and everyone in our community for sticking with us and making 2023 such a success.”

Thursday’s report also comes one day After Zuckerberg He appeared on Capitol Hill alongside industry peers to testify about the impact of the company’s platforms on young users. During the hearing, Zuckerberg issued a rare apology to parents of children harmed by Facebook and Instagram who were in the room.

“No one should have to go through the things your families went through, which is why we’re investing so much and will continue to make industry-leading efforts,” Zuckerberg told parents.

The number of daily active users on Facebook increased 6% year over year to more than 2.1 billion, the company said Thursday. But, in a move previously noted by Meta, Meta CFO Susan Li said the company will no longer report Facebook user numbers — a sign of the company’s focus on a broader set of apps, and perhaps Facebook’s smaller growth potential given its already current size. wide range.

The company said that going forward, Meta will only report daily active people in its suite of apps, which reached an average of 3.19 billion in December.

Zuckerberg also noted on Thursday that Threads — a competitor to X, formerly Twitter, which Meta launched late last year — has reached 130 million monthly active users, indicating strong growth, though the platform is still smaller than competitors.

Highlighting from Thursday’s report was a 2% year-over-year jump in Meta’s average price per ad in the December quarter, a leading indicator of the company’s core advertising business. The December quarter was the first time last year that the average price per ad rose instead of falling.

In the first quarter of 2024, Meta expects its revenue to range between $34.5 billion and $37 billion, a 20% year-over-year jump on the low end.

Definition details Investment plans in artificial intelligence

Zuckerberg said late last year that artificial intelligence would be Meta’s biggest investment area in 2024, and the company on Thursday provided some clues about what that spending will look like.

Meta expects full-year capital expenditures to be between $30 billion and $37 billion — an increase of $2 billion from the high end of the range it previously announced — which the company said will be driven by investments in AI and non-AI servers and data centers. , including the construction of a new data center. (Capital expenditures, in general, are what a company spends on physical assets, such as plant or equipment.)

“Our updated outlook reflects our evolving understanding of the requirements for our artificial intelligence (AI) capabilities as we anticipate what we may need for future generations of basic research and product development,” the company said in a statement on Thursday, adding that it anticipates our “ambitious ambitions.” Long-term research and product development efforts in artificial intelligence will require increased investment in infrastructure after this year.

Meta last year rolled out new AI tools for brands in a move aimed at boosting its advertising business, which was hurt by privacy changes to Apple’s App Store that took effect in 2021. Lee said that “initial adoption of these features has been strong and AI advertising investments “It will continue to be a big area of ​​focus for us in 2024.”

Zuckerberg also said earlier this month that Meta plans to build its own site Artificial general intelligenceknown as AGI, in reference to the company’s desire to continue being a serious player in the AI ​​arms race.

The company also continued to invest heavily in its Reality Labs unit, which houses its investments in building the metaverse, Meta’s vision of an immersive form of the internet based on virtual and augmented reality.

In 2023, Meta posted a loss of more than $16 billion for Reality Labs. The company expects Reality Labs’ operating losses to increase “significantly” this year, Lee said.

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