Profits slump 55% at Facebook owner Meta but shares surge 18%

Facebook owner Meta last night reported a 55 per cent fall in profits as it rounded off a tumultuous year in which its share price slumped.

It was the company’s first earnings report since it announced 11,000 lay-offs last November.

But shares surged 18 per cent in after-hours trading on an upbeat outlook for first quarter revenues.

The social media giant, which also owns Instagram and WhatsApp, said profits plunged to £3.8billion in the fourth quarter, down from £8.3billion a year earlier. 

The bottom line was hit by £3.4billion of restructuring charges related to the decision to lay off staff and close some of its offices – and Meta warned of a further £800million in costs or more to come this year as ‘efficiency efforts’ gather pace.

Slump: Facebook-owner Meta announced 11,000 lay-offs last November and at the time boss Mark Zuckerberg (pictured) was forced to admit ‘I got it wrong’

Revenues for the quarter recorded a third straight decline, of 4 per cent, to £26billion. 

Meta said that for the current first quarter they were expected to come in at up to £23billion, higher than markets were expecting.

That appeared to suggest a rebound in demand for digital ads after months of weak sales. 

Investors have been hoping for signs of recovery after an horrific 2022 when Meta saw its share price plunge by more than two thirds.

Shares had already prior to last night climbed by 27 per cent so far this year. Markets were also cheered by a £32billion share buyback by the company.

Meta, like other tech giants, did well during lockdowns when households spent more time online where advertisers sought to target them.

But with the world reopening and a downturn looming, ad budgets face a squeeze. 

At the same time, surging US interest rates last year damaged the shares of tech stocks, much of whose gigantic valuations were based on the earnings they were expected to deliver in the future.

Higher rates make it less attractive to take a punt on such growth bets.

The tech firms – also including Microsoft, Amazon and Google owner Alphabet, have over recent months been slashing tens of thousands of jobs.

Meta said last autumn it would cut the size of its workforce by around 13 per cent in the first major job cuts in its history. 

Boss Mark Zuckerberg said the economic downturn and increased competition were among the reasons for its revenue to turn much lower than he had expected.