Shares of Meta, Facebook’s parent company, are soaring after the company reported first-quarter earnings and daily user counts that exceeded Wall Street expectations. Shares rose sharply in out-of-hours operations, up 15% above their closing price.
This is despite the company’s slowest revenue growth since it went public a decade ago.
Meta earned $ 7.44 billion in the January-March period, 21% less than the $ 9.5 billion in the same period last year.
Revenue rose 7% to $ 27.9 billion, the slowest growth rate in a decade for the power of online advertising which generally records double-digit sales growth. The Russian war in Ukraine it was a success in revenue, CEO Mark Zuckerberg said.
“We have been blocked in Russia and we have decided to stop accepting ads from Russian advertisers worldwide,” Zuckerberg told investors in a call on Wednesday.
Reverse a bad quarter
Meta’s results, while mixed, mark a turning point in the last three months of 2021, when Facebook reported a drop in users and is expected to spend up to $ 10 billion a year to build metavers-related technology.
In March 2022, Facebook had an average of 1.69 billion daily active users, an increase of 4% year-on-year. This served to reassure investors that last year’s fall was a mistake, rather than a signal of things to come.
The company spent $ 2.9 billion this quarter on Reality Labs. This trend should continue, as Zuckerberg told investors that he expects revenue from the company’s social apps to fund VR development for metavers over the next few years.
“I recognize that it’s expensive to build this, it’s something that has never been built before and it’s a new paradigm for computing and social connection,” he said.
Technology giants have conflicting results
Meta cut a sharp contrast to Google’s parent company Alphabet, which reported disappointing gains on Monday, with profits below Wall Street expectations. Google also reported a slowdown in revenue growth, but for Meta it seems that this has been mitigated by an increase in daily active users that “was enough to send the shorts and the increase in stocks” , said Jesse Cohen, senior analyst at Investing.com.
“That said, it was a mixed report overall, as the social media giant continues to struggle with slowing revenue growth amid declining advertising spending in today’s inflationary environment,” Cohen said.
Recently privacy changes for Apple they have made it difficult for companies like Meta to track people for advertising purposes, which also puts pressure on the company’s revenue. For months, Meta has been warning investors that their earnings may not continue to grow at the same rate they are accustomed to, so it is likely that single-digit quarterly revenue growth has already picked up. investor expectations.
Shares of the Menlo Park, Calif.-Based company rose $ 27.12, or 15.5%, to $ 202.07 in overtime trading.
The shares were a hit this month amid news of Elon Musk’s Twitter purchase and ended the usual price of $ 174.95, 48% less since the beginning of the year.
CBS News’ Musadiq Bidar and Irina Ivanova contributed to the report.
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