Meta Platforms Inc. shares soared despite an earnings miss, as the Facebook parent company guided for potentially more revenue than Wall Street expected in the new year amid cost cuts.
Meta META reported $32.17 billion in fourth-quarter revenue, down from $33.67 billion a year ago, but stronger than expectations. Earnings were $4.65 billion, or $1.76 a share, compared to $10.3 billion, or $3.67 a share last year.
According to FactSet, analysts predicted that Meta would have fourth-quarter revenue of $31.55 billion on earnings of $2.26 a share, and the beat on sales coincided with a revenue forecast that met or exceeded expectations. Facebook Chief Financial Officer Susan Li projected first-quarter sales of $26 billion to $28.5 billion, while analysts projected first-quarter sales of $27.2 billion.
After the release of the results, shares jumped more than 13% in after-hours trading, after closing with a 2.8% gain at $153.12.
Our community continues to grow and I am pleased with the strong engagement across our apps. Meta Chief Executive Mark Zuckerberg said in a statement that Facebook had reached the milestone of 2 billion daily actives. The progress we are making on our AI discovery engine and Reels is a major driver of this. Our management theme for 2023 is the Year of Efficiency and we are focused on becoming a more nimble organization. Snap suffers the worst sales growth since the holiday quarter, stock plunges after earnings misses.
Meta has been in choppy waters as it copes with increasing competition from TikTok and the fallout from Apple Inc. AAPL, a Ad-Tracking system in 2021 that punitively harmed Meta, costing it potentially billions of dollars in advertising sales. Meta laid off thousands of workers after profit and revenue shrunk in recent quarters, and has invested heavily in artificial intelligence tools to rev up its ad-targeting systems and make better recommendations for users of its short-video product Reels.
The results came a day after Snap Inc. SNAP posted fourth-quarter revenue of $1.3 billion a year ago, which is the worst year-over-year sales growth Snap has ever reported. They arrived on the same day Facebook scored a big win in a California court. The company successfully fended off the Federal Trade Commission bid to win a preliminary injunction to block Meta's planned acquisition ofVR startup Within Unlimited.
Read more: Meta wins bid to buy VR startup Within Unlimited, beating the U.S. FTC in court:
Meta shares have plunged 53% over the past 12 months, while the S&P 500 index SPX has fallen 10% over the past year.