The first Facebook accounts (later renamed Meta Platforms) to be listed with the United States Securities and Exchange Commission (SEC) date back to 2008. In that year, Facebook was still a young social network with a turnover of 272 million US dollars (242 million euros at the time). current exchange rate). For a decade and a half, it had a meteoric rise that saw the company expand its business, acquiring Instagram and WhatsApp, and hitting a record $117,929 million in 2021. This exponential growth ended last year, the first year in which the company has seen sales fall, according to results published this Wednesday, which are still better than analysts had expected.
Founded and led by Mark Zuckerberg, the group ended 2022 with total revenues of $116,609 million, down 1% from the prior year. That was already indicated by the poor second- and third-quarter results with year-over-year declines, but for the nine-month cumulative total, Meta still beat last year’s revenue. However, the 4% decline in the fourth quarter put a negative sign on full-year sales for the first time.
The company has suffered from the deterioration in the digital advertising market, but also from currency effects (due to the strength of the dollar) and Apple’s tightening privacy regulations that block ad tracking and hamper its business. Added to this is the competition from TikTok, the social network that, despite its controversial aspects, has triumphed among young people.
Meta last November announced the layoff of 11,000 workers, 3% of its workforce, the largest workforce adjustment in its history, which has been identified as an extraordinary charge of $4.610 million. Currently, in 2022, the workforce has grown by 20% to 86,482 employees. In other words, Meta hired about 14,000 employees last year and then announced it was laying off 11,000. The vast majority of layoffs will stop counting in the first quarter of this year.
Since the company has also made heavy investments in the Metaverse that haven’t paid off so far, the benefits have also suffered. For example, Meta’s traditional business (which includes Facebook, Instagram, and WhatsApp) has lost steam and its operating results are suffering. But the new businesses, which are grouped under the Reality Labs division and which the company sees as essential to the next generation of social networking, suffered operating losses of $4,279 million in the fourth quarter and $13,717 million for the full year.
With all of this, Facebook’s earnings have also fallen sharply, from a record $39,370 million in 2021 to $23,200 last year, a 41% drop. It’s not the first drop in profits in the company’s history, but it’s the biggest. Profits were already slashed by 16% in 2019, but until then, the social network’s revenue continued to grow.
year of efficiency
The use of their networks continues to increase and Mark Zuckerberg takes this as a consolation: “Our community continues to grow and I am pleased about the large participation in our applications. Facebook just hit the figure of 2,000 million daily assets,” he said in a statement, adding, “The advances we are making in our AI discovery engine and Reels are the main drivers of this. Furthermore, our management theme for 2023 is the ‘Year of Efficiency’ and we are focused on becoming a stronger and more agile organization.”
Meta stocks have lost more than half of their value over the past 12 months. The company is facing an existential crisis, with Facebook having ceased to be a near-infinite manna while the metaverse hasn’t quite taken off. At the same time, Instagram is trying to evolve to compete with TikTok. This Wednesday’s results, better than those expected by the market, and the announcement of the share buyback have sent the price skyrocketing in over-the-counter trading.
To promote the award, the company has announced it will extend its stock repurchase plan by $40,000 million, a form of shareholder compensation. This new authorization roughly corresponds to the company’s cash position.
The company expects revenue of between $26,000 and $28,500 million for the first quarter, compared to $27.908 million for the same period last year. The company is reducing its cost estimate for this year by 5,000 million (to the range of 89,000 to 94,000 million) thanks to efficiency measures. Belts are also being tightened when it comes to investments, which are between 30,000 and 33,000 million (instead of the previous estimate of 4,000 to 37,000 million).
The company had good news in court this week. The court has refused to block the purchase of artificial intelligence company Within Unlimited, which competition authorities are demanding.
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