The Meta’s stock price was up 15% on Thursday, jumping to 14-month highs and being 170% higher off its November lows as investors reacted to the latest economic results.
Earnings well above expectations
Meta Platforms has shown signs of stabilizing after three consecutive quarters of year-over-year sales decreases. Meta’s quarterly revenue was $28.6 billion, an increase of 3% yearly. However, even though profits were considerably improved progressively, the bottom line was nonetheless pinched as EPS of $2.20 fell 19%.
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To put that in perspective, experts predicted $27.7 billion in revenue and $2.02 in earnings per share; thus, Meta well surpassed both targets. There are now more than 3 billion unique monthly visitors to the company’s four social media platforms, a 5% rise year over year.
The use of AI was a major topic of discussion at the quarterly results conference call. Facebook and Instagram CEO Mark Zuckerberg said that artificial intelligence recommends about 20% of content on Facebook and 40% on Instagram. Furthermore, AI has boosted time spent on the site by almost 24% since the firm introduced Reels.
AI is also helping businesses make more money. Facebook and Instagram have seen increases in “reels monetization efficiency of over 30% and over 40% quarter over quarter,” Zuckerberg said. Over the past six months, daily income from Advantage+ Shopping Campaigns has increased sevenfold.
Meta may be the most cutthroat firm in Big Tech regarding slashing costs during the current earnings cycle. The business predicted in October that its costs would be between $96 billion and $101 billion in 2023. In a statement released on Wednesday, the firm said it now expects spending this year, including restructuring charges, to come between $86 billion and $90 billion.
This also takes into consideration the anticipated ongoing and increasing losses in Reality Labs, the company’s metaverse subsidiary. For the year 2022, Reality Labs lost $13.7 billion.
As of the conclusion of Q1, the company’s stated workforce was 77,114, down 1% year over year. Meta indicated in its press statement, “As of March 31, 2023, virtually all of the affected employees from the layoffs announced in November 2022 have been removed from our reported headcount.” Therefore, as of that date, the number of workers that will be let go in 2023 is already accounted for in our stated headcount.
Despite there being no money on the workforce, In Q1 2023, Meta repurchased $9.22 billion in shares, and as of the end of March, the business has $41.73 billion in buyback capacity.
The next resistance is now seen at January 2022 lows in the $290 area, representing another 20% potential for the bulls. On the downside, the support could be at $220, April 2023 high.
Meta daily chart, source: author´s analysis, tradingview.com