Metashare jumps in Q4 profitability, costs $4.2 billion after mass layoffs, daily active FB users at 2 billion

Mark Zuckerberg’s Meta, the parent company of Facebook and Instagram, released bullish financial numbers today, beating sales and daily active users, to the surprise and relief of Wall Street. Revenue fell but was hit by a $4.2 billion restructuring charge after the social media giant laid off 11,000 employees late last year.

It was Meta’s first financial report since the company cut jobs in November due to cutbacks in the technology sector. Meta, in particular, has been hampered by heavy investments in and Wall Street skepticism about its massive foray into the Metaverse. Snap’s gloomy outlook yesterday didn’t bode well for ad-supported internet services, but Facebook screwed it up.

Fourth-quarter revenue of $32.2 billion was down 4% year-over-year, but it beat expectations. Profit fell to $4.6 billion from $10.2 billion. Earnings per share were $1.76 versus $3.67, but would have been significantly higher excluding the $4.2 billion charge.

Facebook’s daily active users (DAU) of 2 billion at the end of the year were up 4%. Monthly active users (MAU) of 2.96 billion grew by 2%.

“Our community continues to grow and I am delighted by the strong engagement with our apps. Facebook just passed the 2 billion daily activities milestone,” Zuckerberg said. “The progress we are making with our AI discovery engine and Reels are the key drivers of this. Furthermore, our management theme for 2023 is the ‘Year of Efficiency’ and we focus on becoming a stronger and more agile organization.”

Talk to the analyst later on Wednesday. In the afternoon, to talk about earnings and outlook, the company said it will continue with two core projects, AI and Metaverse, but will keep expenses lower than previous estimates. Zuckerberg said users on his top three social media platforms, including WhatsApp, have never been stronger – something investors may be overlooking – and TikTok rival Reelz is gaining ground, although it is still struggling to match the buzz to keep users in revenue.

Facebook shares rose nearly 20% in late trading on the report. The company announced a $40 billion increase in its stock buyback authorization, which did no harm.

The company and broader markets had already recovered earlier this afternoon when Fed Chairman Jerome Powell signaled that a series of suffocating rate hikes that many fear will push the country into recession is finally starting to weigh on inflation. Advertisers are very fickle in the face of the recession and it is to adapt media and technology.

The job isn’t done yet, Powell said after the Fed’s latest round of rate hikes, but the end may be in sight.