Meta Platforms Inc (NASDAQ:FB) shares popped after the bell on Wednesday – but it wasn’t because of a tidy earnings beat.
Meta’s 4Q painted a mixed picture: the firm posted revenue of $32.2 billion, ahead of consensus estimates of $31.8 billion, and missed on profits, with $1.76 per share (diluted) versus $2.32 per share.
But the technology giant announced a $40 billion stock buyback program, sending Meta stock soaring over 17% and climbing after the bell.
READ: Meta Platforms: will Reality bite again with fourth-quarter earnings?
Details of the buyback program are yet to be disclosed. Meta repurchased $6.91 billion and $27.93 billion of its Class A common stock in the fourth quarter and full year 2022, respectively. As of December 31, 2022, it had $10.87 billion available and authorized for repurchases.
The stock buyback program comes as Meta finds itself weathering a downward spiral: higher costs and lower ad spending has pushed operating profits down around $7.7 billion, or 39% year on year.
Stubborn bet on Metaverse division
For investors, though, the real issue seems to be the stubborn approach to investment in Reality Labs, which is the business unit responsible for working on the Metaverse. Reality Labs posted a $13.7 billion loss in 4Q.
“It’s certainly possible Meta gives the market what it wants, a reign in on spending. But until that happens, or Reality Labs conjures up some magic, we don’t see sentiment changing too much,” analyst Matt Britzman at Hargreaves Lansdown commented earlier this week.
The company recently cut 13% of its workforce at the tail end of last year, to the tune of around 11,000 jobs.
Other highlights from Meta’s fourth quarter 2022 include daily active users (DAUs) of 2 billion on average for December 2022, an increase of 4% year-over-year. Monthly active users (MAUs) were 2.96 billion as of December 31, 2022, an increase of 2% year-over-year.
Meta is expecting first quarter 2023 total revenue to be in the range of $26-28.5 billion.
Contact Angela at angela@proactiveinvestors.com
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