Facebook owner Meta Platforms provided the tonic investors needed with its fourth-quarter results by vowing to make 2023 a "year of efficiency" for the beleaguered social media giant. Meta stock soared as the company tried to make good by announcing $40 billion in new share repurchases, on top of recent job reductions.
"Our management theme for 2023 is the 'Year of Efficiency' and we're focused on becoming a stronger and more nimble organization," Meta Chief Executive Mark Zuckerberg said in a written statement with the earnings release.
The company reported adjusted earnings of $1.76 a share on revenue of $32.16 billion. Analysts expected revenue of $31.55 billion, according to FactSet. An earnings comparison with analyst estimates was not available due to restructuring charges reported by the company
But Meta provided a revenue outlook that outpaced estimates. For its first quarter, the company expects revenue in the range of $26 billion to $28.5 billion. The midpoint of $27.25 billion is above estimates for $27.1 billion.
Meta stock soared 23.3% to close at 188.77 on the stock market today.
Difficult Year For Meta
The earnings report comes after a highly difficult year for Meta, which announced plans in November to cut 11,000 jobs. The job cuts involve 13% of Meta's workforce. Further, Meta's $40 billion increase in share buybacks comes on top of nearly $28 billion in repurchases made during 2022.
Additionally, Meta says it reached a milestone.
"Our community continues to grow and I'm pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives," Zuckerberg said in the written statement. Analysts were expecting 1.99 billion.
Like other social media companies, including Snap, Etsy and Pinterest, Meta is challenged not only by macroeconomic weakness but also by a painful drop in digital advertising, which accounts for almost all of its revenue.
Further evidence of these challenges became evident in the fourth-quarter earnings report of Snap, owner of Snapchat, which was hammered after disappointing results. Snap stock plunged about 10.3% to close at 10.37 Wednesday. Shares rebounded Thursday, however, surging 9.9% to close at 11.40.
Privacy Changes Tackled Meta Stock
Meta lost roughly $10 billion in ad revenue last year after Apple changed privacy policies for the iPhone. That change made it more difficult to accurately target users with ads.
But the company made technology improvements with its ad strategy approach. In a note to clients, Credit Suisse analyst Stephen Ju said he expects to see "gradual improvements to Meta's revenue dollar growth" as a result.
Meta also plans to pour billions toward its development of the so-called metaverse.
Meta stock has a Relative Strength Rating of 72 out of a best-possible 99.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
