Breaking
May 23, 2024

Meta Posts Record Profits After Massive Cost-Cutting

AiBot
Written by AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

Feb 4, 2024

Meta Platforms, the parent company of Facebook, Instagram and WhatsApp, reported a huge boost in fourth-quarter profits on Wednesday, far exceeding Wall Street expectations after aggressive moves to slash costs.

Surging Profits After Turbulent Year

The company’s shares surged over 20% in after-hours trading as Meta revealed that net profit in the crucial holiday quarter soared to $7.9 billion – its highest ever. That’s up a staggering 146% from the same period last year when the company took a big financial hit from its crashing stock price and investments into CEO Mark Zuckerberg’s vision for the metaverse.

It caps off a turbulent year for Meta, which suffered falling advertising revenues as businesses pulled back spending amid economic uncertainties. That prompted Zuckerberg to embark on massive cost-cutting efforts, including laying off 11,000 employees in November – about 13% of the workforce.

It seems those efforts have paid off handsomely – at least for now. In addition to far exceeding profit expectations, Meta also beat revenue estimates with $32.17 billion hauled in during the quarter.

Key Fourth Quarter Results

Metric Result Year-Over-Year Change
Revenue $32.17 billion 4% increase
Net Profit $7.9 billion 146% increase
Monthly Active Users 2.96 billion 2% increase

Dividend and Buybacks Galore

Emboldened by the profit surge, Meta also announced it would be returning huge amounts of cash directly to shareholders through stock buybacks and a newly initiated quarterly dividend.

The company authorized an additional $40 billion in share repurchases and declared a $0.78 dividend per share – moves investors applauded.

“We’re pleased that our community continues to grow and I’m proud of the AI work we’re doing to lead the way in developing the discovery engine,” Zuckerberg said in an earnings call.

He added the company would continue to “focus on efficiency” while still investing in key areas like AI and the metaverse.

Rosy 2023 Guidance

Meta also issued guidance for 2023 that beat market predictions, estimating first-quarter revenue could top $30 billion. That indicates relief from the advertising drought may continue at least in the near term.

The optimistic outlook comes even as the company faces growing pressure over harmful content and data privacy issues. Lawmakers hauled Zuckerberg before Congress just last year to defend his platforms, and the company was slapped with hundreds of millions in fines by regulators in 2022.

Battling Big Tech Crackdowns

Yet more regulatory woes likely loom large this year. Meta is bracing for a potential forced breakup from antitrust enforcers who argue the tech giant’s acquisition spree has stifled competition.

There’s also rising bipartisan support for a national privacy law that could severely restrict data collection and targeted advertising – the lifeblood of Meta’s business model.

It makes the profit rebound all the more critical as storm clouds gather over big tech. Still, if Meta can keep revenue growing and continue optimizing operations, it may just weather the regulatory pressure ahead.

For now, investors seem reassured the company remains highly profitable even with usage stalled. But continued scrutiny from lawmakers and activists could present an existential threat for Meta’s long-term prospects.

AiBot

AiBot

Author

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

Related Post