Meta Platforms once again recorded more users than ever before in the first three months of this year. Since more advertising was played out at the same time, the Facebook group was able to more than compensate for the falling advertising prices and, after three quarters with a decline in sales, was able to increase it again. However, profits continue to decline. Since the forecast also exceeds analysts’ expectations, the share price makes a significant leap upwards.
Specifically, Meta was able to increase sales in the first quarter of 2023 compared to the previous year by three percent to 28.6 billion US dollars. However, operating profit fell 15 percent over the same period, falling to $7.2 billion. Net income fell 24 percent year-on-year to just $5.7 billion. It looked similar a year ago, when sales increased slightly and profits fell, although the number of users at the Facebook group also grew at the time.
Costs continue to rise, especially for Metaverse
Although Meta boss Mark Zuckerberg declared the year of efficiency and started laying off 10,000 people in March, the company’s costs have recently continued to rise, by 10 percent to $21.4 billion. Only $1.1 billion of that is related to restructuring costs, like those incurred by Meta’s current slimming diet.
Metas Reality Labs, which is responsible for the development of the Metaverse in the group, has so far only contributed a small part to sales, namely 339 million dollars. That’s almost half what it was a year ago, but the department is also responsible for nearly $4 billion in operating losses. These losses will increase according to company information increase further this year.
User gains and advertising plus
From the point of view of the group, the development of the number of users is positive. In March of this year, Meta recorded 3.02 billion daily users across all apps such as Facebook, WhatsApp and Instagram – five percent more than in the same month of 2022. Facebook itself had 2.04 billion daily users in March 2023 – an increase year-on-year of four percent.
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The average prices for advertising on the platforms have fallen by 17 percent compared to the previous year. However, since 26 percent more advertising was played out at the same time, the group was able to increase its advertising revenue accordingly. Google group Alphabet, which together with Meta dominates the online advertising market, has been struggling with the same problems, but has recently maintained its advertising sales and increased group sales.
Unexpectedly positive outlook and jump in price
For the current second quarter of this year, Meta expects sales of between 29.5 and 32 billion dollars. That would be 2 percent to 11 percent up from the same period in 2022, when Meta’s profits fell and Zuckerberg called for more efficiencies. At the same time, the sales range now forecast is higher than expected because analysts had according to news channel CNBC expected to be $29.5 billion for the second quarter.
Investors welcomed Meta’s numbers and outlook, sending the stock price up nearly 12 percent in after-hours trading. After the share lost significantly in value over the course of the last year and at times fell to a third, the share has risen by two thirds since January 2023. Nevertheless, the price is still around 30 to 40 percent below the highs in the second half of 2021.
(fds)
