Meta’s stock went up by 15% in trading that happened after hours following a great fourth-quarter earnings report. This came right after Mark Zuckerberg got criticized a lot in a tough congressional hearing.
The company also said it will give a dividend of 50¢ for each share to its investors for the first time ever. They also agreed to buy back shares worth $50 billion.
In total, Meta made $40.1 billion in revenue in the fourth quarter, which is more than what experts expected ($39.18 billion) and 25% higher than last year. This report comes as Meta, like other big tech companies, tries to use artificial intelligence (AI) in its main products. Zuckerberg said in a statement that Meta has been making a lot of progress in using AI and creating the metaverse.
Zuckerberg had talked about Meta’s plans to invest in AI in the previous earnings call. He said it would be their biggest investment in 2024. Earlier in January, Zuckerberg said in a video on Instagram that they would buy Nvidia chips worth $9 billion to help them use AI more.
They plan to use AI to make advertising better and earn more money from it. They also want to use AI for new Meta products like AI chatbots. Revenue from advertising, which is the main way Meta makes money, was $38.7 billion, compared to $31.25 billion last year. Meta’s hardware products like the Quest 3 VR headset haven’t made a big contribution to their revenue yet. Zuckerberg said they plan to offer AI services more widely in the coming months.
Meta fired more than 20,000 workers in 2023 to save money. Zuckerberg said it was a year of being efficient. This seemed to have worked because Meta’s operating margin doubled to 41% from 20% in the same quarter of 2022. Expenses went down by 8% compared to last year, reaching $23.73 billion. The Chief Financial Officer, Susan Li, said Meta had more than 67,300 employees at the end of the fourth quarter, which is 22% less than last year, but 2% more than the third quarter after they started hiring again.
Investors are worried about regulations after Meta got criticized at a congressional hearing. The hearing was about how their platforms affect young users. Zuckerberg said sorry to parents in the crowd whose children had died because of bad things that happened online.
During the hearing, Congress members talked about laws that could take away Meta’s legal protection for things people post on their platforms. This comes after Meta got sued by attorneys general from 41 states because of its effect on young users. New Mexico’s attorney general also sued Meta for not stopping child sexual exploitation and trafficking.
Because of these worries about regulations, Meta is trying to make money in other ways, not just from ads. Reality Labs, the part of Meta that makes virtual reality products, lost $4.65 billion in the fourth quarter, more than last year. This made Meta lose $16.12 billion in total for 2023. Meta said they expect to lose even more money from Reality Labs this year as they try to make it bigger.
Besides regulations, Meta is also losing users, especially young ones who are going to apps like TikTok. Most new users for Meta’s platforms are from outside North America. Jasmine Enberg, an analyst, said, “Facebook is not growing much in the US, especially among teens, because lawmakers are worried about it, and that could stop Facebook and Instagram from growing there.”
