Meta skyrockets through most of the decade, adding $100 billion in value
Meta skyrockets through most of the decade, adding $100 billion in value
Shares of Meta surged on Thursday after the company reported better-than-expected earnings, announced it would buy back billions of dollars of its stock and overcame a legal challenge to its ambitions in the so-called Metaverse.
Shares of the tech giant, owner of Facebook, Instagram and WhatsApp, soared more than 24% in what would be its biggest daily gain in nearly 10 years. And that’s a huge step forward for a company of its size, adding some $100 billion in market value in a single day, about as much as Citigroup’s total market capitalization.
What is the Metaverse and why is it important?
The origins.The word “metaverse” describes a fully realized digital world that exists beyond the one we live in. It was invented by Neal Stephenson in his 1992 novel “Snow Crash”, and the concept was further explored by Ernest Cline in his novel “Ready Player One”.
After ending last year with a loss of more than 60%, Meta’s stock has risen more than 50% this year as the mood among tech investors has improved. The Nasdaq Composite, an index that includes many tech companies including Meta, is up nearly 20% this year.
Here is the latest news on Meta:
The company’s earnings beat expectations and announced a major buyout plan. Its revenue in the last three months of last year, just over $32 billion, was down 4% from a year ago but above analysts’ forecasts. On Wednesday, the company also said first-quarter sales would be better than expected and announced $40 billion in share buybacks, after buying $28 billion of its own stock last year.
Flat – and even slightly lower – is the new high. Despite declining revenue, Meta’s core products, such as Facebook and Instagram, are still seeing strong sales in a tough economic climate. It bolstered Wall Street sentiment on the company and pushed back some of the most pressing concerns that Meta is in imminent danger from challengers like Apple, TikTok or other social media companies – for now. , at least.
Meta leaders can cut costs when needed. For years, Meta has spent lavishly on rapid expansion, whether in the form of new offices, a swell in the number of employees or future-oriented technology with no immediate plans to gain the money. But in its most recent quarter, the company proved it could find areas to cut when pressed. Mark Zuckerberg, chief executive of Meta, called 2023 “the year of efficiency” in an earnings call on Wednesday, including the termination of a series of office leases, the redesign of data centers so that ‘they cost less and the laying off of thousands of what he described as “managers managing managers”. Wall Street welcomed the moves.
Meta can always bring new people to Facebook. Facebook’s big blue app surpassed two billion daily active users for the first time last quarter, a huge and shocking milestone given the service’s already large size. It’s a signal that if the competition from other social networks is tough, people are still using Facebook.
His virtual reality deal survived a legal challenge. On Wednesday, a federal judge denied the Federal Trade Commission’s request to stop Meta from spending $400 billion to acquire a virtual reality startup called Within, in a major legal victory for the company as it invests massively in the metaverse, where users work, play and consume content through virtual and augmented reality. (Less fortunate for Meta, a month ago European regulators ruled that it had illegally forced users to actually accept personalized ads, fining the company more than $400 million and forcing it potentially make costly changes to its advertising business in the European Union.)
Many challenges remain to be met. Meta is facing setbacks in digital advertising as customers curb spending due to rising interest rates and inflation. The company is also battling to retain users drawn to new apps like TikTok, the short-form video app Mr. Zuckerberg sees as one of his toughest rivals. The billions that Meta spends pursuing its founder’s vision for the metaverse may not pay off.
Meta laid off more than 11,000 employees in November. The company slashed its workforce by 13% in the round of layoffs, equivalent to the largest job cuts since its founding in 2004. Meta took a $4.2 billion restructuring charge for the fourth quarter, including the costs of the early termination of the mandate. leases and severance packages for employees. The company expects an additional $1 billion in restructuring costs in 2023.
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