8 months ago • 2 mins
What’s going on here?
Meta has been spending a lot of time on the operating table lately, and better-than-expected results released late on Wednesday show a slight glimmer of hard-earned gains.
What does this mean?
Facebook-parent Meta is trying to become a leaner, meaner, social media machine by not betting the house on the Metaverse and cutting costs instead. And its recent results showed off its new, hot physique: the social media gargantuan brought in 5% more monthly active users last quarter versus the same time last year, and its core advertising business made 4% more – despite the heavy weight of an economic slowdown. That sent overall revenue up by 3%, defying investor expectations for a fourth-consecutive quarterly drop. And Meta’s future regime looks healthy too, with the firm providing a forecast for 2023’s total expenses that was far slimmer than expected. Investors were practically salivating: they sent Meta’s shares up by more than 10% initially.
Why should I care?
Zooming out: Age fatefully.
Meta’s been under the knife, slicing nearly a quarter of its staff in a bid to rejuvenate its sagging form. And sure, some analysts expect the nipped-and-tucked firm to see profit growth again come June, spurred on by those slimming operations and a more energetic advertising market. But there’s only so much pruning and trimming a firm can do, so Meta will need to muster up some long-term revenue growth if it wants to permanently revisit its glory days. Otherwise, surgery will only delay – not erase – the slower growth effects of aging.
Zooming in: Let’s be reel.
TikTok’s been plaguing Meta’s business for a while, pinching advertiser-coveted eyeballs away from Facebook and Instagram. And while Instagram’s Reels – an almost uncanny short video format – has been putting up a good fight, Meta will need to make sure its stalwarts stay popular enough to ward off fresh competition in the future, especially as the firm explores ambitions outside of the socials realm.
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