Meta: the annual revenues of the American giant fall for the first time since its IPO

With each passing quarter, Meta becomes a little more of a colossus with feet of clay. After a catastrophic third quarter, the Menlo Park group announced a turnover down 4%, to 32.2 billion dollars for the last three months of 2022. Over this period, the net profit was also divided by two to 4.7 billion dollars, quite far from the 6 billion expected by the markets.

At the end of the fourth quarter, Meta concluded a nightmarish year, marked by the first decline in its annual revenues since its IPO in 2012. In 2022, the American giant achieved a turnover of 116.6 billion dollars, down 1% compared to fiscal 2021. The finding is even more violent in terms of profits, which fell 41% in 2022 to $23.2 billion.

A year ago, Meta began its long way of the cross by recording a decline in its users for the first time in its history. Since then, this indicator has started to rise again, the Californian company having succeeded in reaching the bar of 2 billion daily users on Facebook. Each month, more than 3.7 billion people (+4% over one year) use one of the group’s services (Facebook, Instagram, Messenger and WhatsApp), i.e. nearly half of humanity.

Meta is therefore once again managing to grab users for its various applications despite competition from TikTok, but it carries its shift towards the metaverse like a burden, which has annoyed as much as it has worried investors for several months. In 2022, Reality Labs, the unit responsible for developing the metaverse, lost $13.7 billion, including $4.3 billion in the fourth quarter alone. To make matters worse, the Horizon Worlds platform, the first draft of its metaverse, hardly unleashes the crowds.

Shareholders reassured by the outlook… and a share buyback program

Faced with these poor figures and the growing concern of shareholders, Mark Zuckerberg told his employees at the end of the year that the WhatsApp and Messenger apps would stimulate the next cycle of sales growth. The boss of Meta gave a layer on the occasion of the publication of the quarterly results, proclaiming that the immediate priority of his group is artificial intelligence, in front of the metaverse. At a time when ChatGPT is unleashing passions, this strategic choice seems quite logical, especially since recommendation algorithms are the sinews of war on social networks.

However, are these pro-investor remarks enough to explain the stock market rebound of Meta, whose action gained nearly 20% in trade after the close of Wall Street on Wednesday evening? Only partially, because the real good news for shareholders is the launch of a $40 billion share buyback program. Enough to calm the growing discontent of investors for a while.

The latter will no doubt also appreciate that Meta is revising its investments downwards in 2023. While it was initially planned to invest between 94 and 100 billion dollars until next December, this range has been reduced to between 89 and 95 billion of dollars. In addition, the firm recently reduced its payroll, after laying off 11,000 employees, or some 13% of its workforce. In this context, hiring has been frozen until the end of March 2023.

The challenge now is to regain color on the stock market after a difficult year 2022, where the valuation of Meta collapsed by 600 billion dollars, or two thirds less in the space of a year.