Meta Rise On Cost Cuts, Reporeted Economist Digital Subscription

Meta posted better-than-expected fourth-quarter revenue of $32.17 billion, announced Economist Digital Subscription despite its third consecutive quarter of declining sales.

A net income of $4.65 billion. The consensus estimate from Wall Street was for revenue of $31.55 billion and a net income of $6.02 billion.

Analysts noted that the company’s cost-cutting marks a departure from previous quarters when the company warned of climbing expenses and greater losses expected at its unit overseeing its metaverse ambitions.

Mr. Zuckerberg said on the call with analysts that the company would take measures including removing layers of middle management and being “more proactive about cutting projects that aren’t performing or may no longer be as crucial.”

“We expect this recently found discipline to drive a stronger and more nimble organization over the long run, not just for the next 12 months,” J.P. Morgan’s Doug Anmuth and Katy Ansel said in a note.

The Menlo Park, Calif., company said it expects its 2023 expenses to be between $89 billion and $95 billion, lower than its previous outlook of between $94 billion and $100 billion. WSJ Print Subscription also said forecasts capital expenditures to fall between $30 billion and $33 billion, down from its prior guide between $34 billion and $37 billion.

“The positive surprise was the level of reduction in opex and capex guidance…demonstrating significant commitment to being disciplined going forward,” said Mizuho Securities USA LLC’s James Lee and Wei Fang in a note. 

Also, Economist Digital Subscription said Meta showed upside in other areas, including an improving environment for online ad spending in the U.S. and Europe and better monetization from its short-video feature Reels, according to Bank of America analysts, which should lead to faster revenue growth.

In other cost-cutting measures, the company in November announced an 11,000-worker layoff echoed by other technology companies looking to shave expenses following less-than-stellar growth.

Meta is putting its money toward efforts such as artificial intelligence to adapt to Apple’s privacy changes, an effort that could enable the company to make better predictions based on fewer data. The Wall Street Journal has reported.

Get Wall Street Journal 3-Years Digital for $129

Another potential tailwind for Meta’s stock could be increased scrutiny of TikTok in the Republican-controlled House of Representatives alongside Democrats

What’s more, Snap Inc. this week warned investors of a sales drop as it also struggles to revive growth.

Meta reported a milestone of 2 billion daily active users for Facebook in the quarter that ended Dec. 31, a 4% year-over-year increase. Its family of apps had 2.96 billion daily active people, a 5% increase year over year.