Facebook owner meta platforms (META) late Wednesday reported fourth-quarter results that beat sales as the company struggles through its toughest period since its inception 19 years ago. Meta shares skyrocketed as the company announced a $40 billion share buyback.
X
Also, Meta provided a sales forecast that beat estimates. For the first quarter, the company expects sales of between 26 and 28.5 billion US dollars. The median of $27.4 billion is above estimates of $27.1 billion.
The company reported adjusted earnings per share of $1.76 on sales of $32.16 billion. Analysts were expecting $31.55 billion in revenue, according to FactSet.
Meta stock rose 17.9% to 180.85 during after-hours trading today.
Difficult year for Meta
The earnings report comes during an extremely difficult year for Meta, which announced plans to cut 11,000 jobs in November. The job cuts will affect 13% of Meta’s workforce. Meta also said it announced a $40 billion increase in its share authorization on Wednesday.
Like other social media companies, including snap (SNAP), Etsy (ETSY) and Pinterest (PINS), Meta is challenged not only by macroeconomic weakness but also by a painful decline in digital advertising, which accounts for almost all of its revenue.
Further evidence of these challenges was evident in Snapchat’s owner Snap’s fourth-quarter earnings report, which was hammered after disappointing results. Snap stock plunged about 10.3% to close at 10.37 a.m. on Wednesday.
Privacy changes attack Meta Stock
Meta lost about $10 billion in ad revenue last year Apple (AAPL) amended privacy policy for the iPhone. This change made it more difficult to accurately target users with ads.
But the company has made technological improvements with its ad strategy approach. In a note to clients, Credit Suisse analyst Stephen Ju said he expects “gradual improvements in Meta’s revenue growth” as a result.
Meta also plans to invest billions in the development of the so-called Metaverse.
Meta stocks have a relative strength of 72 out of 100.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
YOU MAY ALSO LIKE:
Facebook parent meta hit by hard times in 2022 can overcome obstacles
In an emotional letter, Zuckerberg explains the reason for mass layoffs at Meta
Best Growth Stocks to Buy and Watch: See IBD Stock List Updates
Find the best long-term investments with IBD Long-Term Leaders
Inside the IBD 50: Top Stocks to Watch