This week has been a before and after in the history of Meta. The company led by Mark Zuckerberg announced last Wednesday revenues of $32.2 billion in fiscal fourth quarter results. While they slightly exceeded analysts’ estimates, the results are somewhat poorer than those achieved last year (down 4%).
The parent company of WhatsApp, Facebook and Instagram has also decided to cut its cost forecasts for this year by $5 billion and, wallet in hand, has decided to buy back $40 billion worth of shares, triggering a 17.6% share price rise on Thursday.
According to Bloomberg, this rise in the stock increased its market value by almost $88 billion. If we take into account that in the third quarter the company took a hit valued at 89 billion dollars due to the enormous costs of the investment in the metaverse, this recent revaluation would have almost totally compensated for what was lost.
These results are quite promising for Meta, which suffered during the last year from the effects of the economic recession. Both the company and other industry giants such as Microsoft, Twitter, Spotify, ByteDance or, more recently, IBM itself announced layoffs in many of their departments in order to reduce costs and rebalance their balance sheets in the long term, something that might not be a very good idea.
Meta’s staff cuts are in addition to other cost-cutting measures, such as the closure of many of its data centers and the cancellation of virtual reality video games such as Echo VR, which together have cost the company 4.2 billion dollars, severely affecting its revenues. Analysts’ estimates predicted a drop in revenues of up to $6 billion, although the figure has finally been lower, at $4.7 billion.
Zuckerberg is optimistic, although he plans to continue to tighten the company’s costs this 2023. “There will be more we can do to improve our productivity, speed and cost structure,” Zuckerberg stated. “2022 was a tough year. But I think we ended up having made good progress on our top priorities and preparing to deliver better results this year, as long as we keep pushing on efficiency.”
