Meta has released its final quarterly and full year financial results for 2022, and the results are...mixed for the company formerly known as Facebook. Meta’s revenue slightly exceeded analyst’s expectations, but nonetheless the tech giant hasn’t fully recovered from what’s been a difficult past 12-months.
In the immediate aftermath of the results release, Meta’s stock value jumped by more than 17%, signaling renewed confidence from investors. However there’s probably still a lot worth considering before jumping on the buy Meta bandwagon.
The big points: Mark Zuckerberg’s expensive attempted pivot towards virtual reality continues to accelerate unabated. The company beat Wall Street revenue expectations about 2%. Yet Meta’s 2022 revenue is still down by more than 1% compared with 2021's. For just the last quarter of 2022 compared with the same time frame in 2021, that drop was even more pronounced, at greater than 4%. Though the company saw an upward swing in both advertising revenue and income from its apps (Facebook, Instagram, Messenger, and WhatsApp), it wasn’t enough to make up for the previous declines.
In case you’ve been under a rock (or just offline), here’s a little refresher: 2022 and the beginning of 2023 has been a tough time period for Meta along with basically every other major tech company. In the second quarter of last year, Meta reported its first ever revenue decline in company history, with its income dropping by 1%. Then, in the third quarter of last year, the company quadrupled that decline—still netting profit, but about 4% less than it did during the same quarter in 2021 (a move the company has repeated this most recent quarter).
With back-to-back poor earnings, Meta lost about $700 billion in market value between October 2021 and October 2022. Over the summer, the company announced it would cease its contracts with news publishers, and no longer pay for news content on Facebook. Zuck then enacted mass layoffs in November 2022—another first—cutting about 11,000 employees.
Yet all the while, CEO Zuckerberg has kept pushing towards VR, even with little to show for the efforts thus far. In the first three quarters of 2022, Meta lost more than $9.4 billion in the money pit that has become the company’s “Reality Labs,” i.e. the group of people responsible for the apparent mess that is the metaverse. Somehow, between last year’s third and fourth quarters, that rate of VR spending increased even more. The company lost an additional $4.28 billion on its Reality Labs in the last three months of 2022, compared with about $3.67 billion in losses in the preceding three months.
Bonus: though the spending on Meta’s metaverse projects, including its VR hardware, has been increasing—the year over year revenue from those projects has declined.
In 2023, the company expects its total expenses to be lower than previously forecast, as noted in the Wednesday report. However, Meta didn’t specify if that means it will be backing off of metaverse spending.
In efforts to calm investors in November, Zuckerberg said that WhatsApp and Messenger would be the company’s future focal points for boosting income. Yet the company’s meh app revenue suggests that that money machine hasn’t fully materialized yet.
But hey, to be fair, let’s end on some good news for Meta. The money the company had/has to pay out to its laid off employees hasn’t set it back too much. “The impact of the severance and other personnel costs recorded in the fourth quarter of 2022 was not material after offsetting with the savings from the decreases in payroll, bonus and other benefits expenses,” Meta wrote in its quarterly press release. Yippee!