Meta shares jump despite slower revenue growth
CEO Mark Zuckerberg says the revenue acceleration that the company experienced during the pandemic has now levelled out
Stocks of Facebook parent company Meta Platforms surged late Wednesday after the social media firm reported quarterly results, beating analysts' expectations despite the company's slowest revenue growth since going public about a decade ago.
Meta shares were up 18% in late trading, according to CNBC.
The company reported revenue of $27.91 billion in the March quarter, up 7% year over year. That was approximately in the middle of the company's forecast range of $27 billion to $29 billion, although it fell short of the Wall Street consensus expectation of $28.3 billion.
The firm's profit in the January-March period was $7.47 billion, or $2.72 per share, down 21% from $9.5 billion, or $3.30 per share, in the same quarter last year.
In a turnaround from its historically bad Q4'21, Meta said it added users across the board. In Q1'22, the firm had 2.87 billion daily active users, up 6% from the same period a year ago.
Facebook daily active users in the March quarter increased by 4% to 1.96 billion, reversing a decline in the December quarter when Facebook app lost 1 million daily active users.
Facebook's family of apps, which includes the core app, WhatsApp and Instagram, generated 97.5% revenue for the company. The remaining $695 million came from Reality Labs, the division tasked with developing metaverse-related products.
Facebook expects revenue of $28 billion to $30 billion in Q2'22, falling short of the $30.6 billion forecast by analysts polled by Refinitiv.
In a conference call with analysts, CEO Mark Zuckerberg said that the revenue acceleration that the company experienced during the epidemic has now levelled out, and that the business would now slow the pace of some investments in order to maintain profit growth.
"We made progress this quarter across a number of key company priorities and we remain confident in the long-term opportunities and growth that our product roadmap will unlock," Zuckerberg said.
"More people use our services today than ever before, and I'm proud of how our products are serving people around the world," he added.
Meta is currently undergoing a transition from social networking to the metaverse company, which is a costly affair for it.
According to reports, Meta will unveil additional headsets in the next years in the hopes of monetising the metaverse in order to compensate for its sluggish overall growth.
It faces other challenges as well.
Apple's decision to reduce ad tracking in its iPhone OS, for example, has resulted in revenue losses for Meta.
Apple's App Tracking Transparency (ATT) feature, which lets users to choose whether or not they want their applications to monitor them across the web, would cost Meta up to $10 billion in 2022, according to the social media giant.
Meta has been facing increasing competition from TikTok and also remains under pressure over antitrust allegations from Congress.
Earlier this year, a British legal expert launched a £2.3 billion class action lawsuit against Meta, over allegations that the company had abused its market dominance to generate billions of dollars in revenue from consumers' data, without compensation.
In December, Rohingya refugees from Myanmar sued the company over allegations that the platform ignored inflammatory posts and hate speech against the ethnic group, leading to the genocide of its members in the south-east Asian country.