Meta’s shares rise amid first sales hike in 2023

Meta Platforms, the parent company of Facebook, posted its first sales increase in almost a year and expects second-quarter revenue to exceed market expectations. Shares of the company rose by 12% following the announcement, adding over $50 billion to its market value, with profits surpassing Wall Street estimates. Digital advertisers have returned to social media platforms such as Facebook and Instagram amid increasing economic worries.

Meta’s tech rivals, including Google parent Alphabet and Microsoft, have also reported strong quarterly results with digital advertisement sales holding up better than expected. Meta is currently in the midst of an aggressive cost-cutting drive, planning to eliminate 21,000 jobs and flatten its middle-management structure. This drive was part of CEO Mark Zuckerberg’s goal to turn 2023 into the “year of efficiency.”

Debra Aho Williamson, principal analyst at Insider Intelligence, commented on the results, stating that the austerity drive was off to a “stronger than expected start for Meta,” and that the strong guidance for Q2 revenue is an indicator that the company may be starting to emerge from a challenging period. The company has faced economic pressures, including a pandemic-era e-commerce slowdown and increased competition from rivals such as TikTok.

Meta is also simultaneously investing heavily in overhauling its core business and upgrading its AI capacity, with Zuckerberg noting that the company’s AI work is driving positive results across its apps and business. The company’s capital expenditures rose as a result of its AI retooling, coming in slightly under expectations at $7.1 billion for the quarter.

For the first quarter of the year, Meta’s net profit fell to $2.20 per share from $2.72 a year earlier but beat expectations. Revenue rose by 3% to $28.65 billion, exceeding analysts’ average estimate of $27.66 billion. The company expects current-quarter revenue between $29.5 billion and $32 billion, compared to Refinitiv data analysts’ estimates of $29.53 billion. Meta narrowed its annual expense forecast to between $86 billion and $90 billion, down from $86 billion to $92 billion in March when it announced its second round of layoffs.