Mark Zuckerberg, CEO of Meta Platforms Inc., struck a different chord with investors on Wednesday. He promised to make the social media giant more efficient, less wasteful and quicker in its decision-making – all aided by artificial intelligence technologies.
On an earnings call with shareholders, Mark Zuckerberg shared that they are “working on streamlining our organizational structure and eliminating some layers of middle management to expedite decision-making, as well as deploying AI tools to enable engineers to work more productively.” He added that there are still more strategies they can execute to increase efficiency, accelerate operations and reduce costs.
The Future of The MetaVerse
Mark Zuckerberg declared that the firm is leveraging AI to augment how it suggests content, a tactic meant to make the platform more appealing both to users and advertisers. Although Meta still grapples with limited demand for digital ads – which account for nearly all of its sales, particularly from financial and technical customers – there are some enterprises such as health and travel in which firms are increasing their expenditures.
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For the fourth quarter, sales dropped 4% to $32.2 billion – marking its third consecutive period of diminishment. Despite this, total figures surpassed analysts’ expectations and Meta estimated its revenue for the upcoming quarter at between $26 billion and $28.5 billion, which aligns with analysts’ average prediction of $27.3 billion. It is expected that Meta will experience a rebound in progress after the current term ends.
Shares of the company saw a boost of more than 20% in after-hours trading (2/1/2023) due to better-than-expected fourth-quarter revenue. Despite his lofty ambitions for a digital world dubbed the metaverse, Mark Zuckerberg’s attention on Wednesday was turned towards more immediate objectives: serving users the most appropriate videos at precisely the right times and, finally, generating substantial income from messaging applications. He declared 2023 as the year of efficiency.
Shares of Meta, which have risen 27% this year, appear to be back on the upswing following its most detrimental stock-wise year in history. This downfall was largely attributed to weak overall economic conditions that led to a decrease in advertiser interest as well as an alteration of privacy regulations implemented by Apple Inc., which made it harder for Meta to offer personalized ads. Accordingly, the company was forced to eliminate 11,000 jobs (i.e. 13% of its employees) in November 2020 – its first big layoff since being established.
After making significant cutbacks in November 2020, Meta’s fourth-quarter performance showed a marked increase, with the flagship social network Facebook now boasting 2 billion+ daily users – an increase of 70 million from the previous year.
To further buoy its stock, Meta increased its stock-buyback authorization by a whopping $40 billion. Additionally, the company recorded restructuring costs of $4.2 billion during the fourth quarter in connection to the job cuts previously mentioned.
To assuage investor worries that it is over-inflating its expenditure on virtual reality, Meta announced that it expects costs for 2023 to be between $89 billion and $95 billion – lower than they had initially predicted.
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