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Meta Shares Grow Despite Revenue Decline

Al Hammoury
Meta Shares Grow Despite Revenue Decline

Ex-Facebook jumps up by 23% due to positive results unexpected by Wall Street. User count grows while corporate reorganizations with mass layouts are on the way. 

Meta Platforms reported a Q4 2022 revenue drop late Wednesday, Feb 1. Still, Facebook’s parent company stock prices jumped 18% up in the after-hours. The third in a row, the share price drop was once again caused by uncertainty in the markets, high competition, and bulk layoffs.

Still, the performance was better than expected. The actual quarterly revenue amounted to $32.16 billion, which is higher than had been anticipated by Wall Street forecast estimates of $31.5 billion. Meta delivered a better number of user growth and sales against analyst expectations.

At the time of writing, the shares surged by 23% since the earnings report:

Meta Stocks Chart. Feb 3 2023

Many factors contribute to the Meta shares’ successful performance now. Facebook parent CEO, Mark Zuckerberg, promised to limit expenditures in 2023 due to structural re-organizations. In Autumn 2022, the company initiated mass layoffs anticipating 11.000 employees to dismiss. The headcount reduction is exercised in the metaverse division too. 

Meta’s Reality Labs brought losses of $4.27 billion last quarter. This contributed to the overall revenue decline due to big company investments being made in the unit.

Another reason for share growth despite the revenue falls is the current mood in the big tech. Meta Platforms has sat out the shock of Musk’s Twitter acquisition and increasing regulatory concerns about personal data protection in Microsoft and Google.

In contrast, Meta was lucky to win a right to buy fitness startup Within bypassing the FTC attempts to “kill the deal.”

The Meta rally fuels other market sectors and adds up to the post-Fed gains won a day before. Nasdaq and S&P 500 grow Thursday. 

Wednesday’s reports of Meta earnings close the losing year of 2022 for the company. Since Q1 2022, Meta Platforms shares have lost around 70% of value. In part, the drop followed the ads market reduction, which dramatically influenced the Facebook parent, one of the biggest online ads providers on the market. Skepticism around Virtual Reality technologies in the investor communities also contributed to this a lot.

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