Meta’s Profits Down More Than 40% Last Year, But Stock Rallies As Zuckerberg Streamlines Company

The final earnings report was published by Meta for 2022 indicated that the social media company’s net income declined 41% over the course of the year, prompting executives to announce efficiency improvements in comments that appear to have restored investor confidence.

Meta earned $116.6 billion in revenue in 2018, a decrease of 1% from the $117.9 million in 2021. The rapid decline in net income was caused by a higher effective tax rate, and 23% more costs related to operations. Earnings report.

Reality Labs, which is a business unit dedicated to developing hardware and software products in the metaverse, reported operating losses totaling $13.7 billion. These losses are more severe than the $10.2 million reported in 2021. Family of Apps, which encompasses social media platforms Facebook Messenger, Instagram and WhatsApp, earned $42.7 billion, a decrease of $56.9 million in the previous year.

Mark Zuckerberg, Meta CEO, has criticized the decline in profitability. Brad Gerstner, Altimeter Capital Management CEO recently Write An executive wrote a letter to encourage him to decrease spending on metaverse projects and drastically reduce headcount. The number of employees has more than tripled over the past four year, from 25,000 to 85,000.

“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” He stated. “These incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion.”

Andrew Bosworth, Meta Chief Technology Officer, was also admitted to the program in a blog post that the company’s culture has drastically changed in recent years. He recalled that Zuckerberg used to reject the idea that the company support different causes or nonprofits out of concern that it would distract from their overall mission. Meta now devotes significant resources. Ressources Toward sustainability and community support

“Resources and time were so tight that you could feel the weight of all the things you weren’t working on,” Bosworth wrote. “You had real conviction that the thing you were doing was the most important thing.”

Zuckerberg Discontinued 13% of his company’s workforce in the weeks after he received the letter from Gerstner. During an interview, Gerstner made the following comment: Earnings call He has chosen 2023 to be the year. “Year of Efficiency” Investors were informed that the company was going to make additional efforts to streamline operations.

“We are going to be more proactive about cutting projects that aren’t performing or may no longer be as crucial. But my main focus is on increasing the efficiency of how we execute our top priorities,” He commented. “So I think that there is going to be some more that we can do to improve our productivity, speed, and cost structure. And by working on this over a sustained period, I think we will both build a stronger technology company and become more profitable.”

After Zuckerberg’s assurances, Meta shares rose more than 20%. This suggests that investors were encouraged by the focus on efficient operations. The company, along with the rest of technology sector, had outperformed the stock market last year.

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