Meta Stock Surges After Revenue Beat, Optimistic Outlook

Shares of Facebook's parent company, Meta, went up more than 17% in after-hours trading Wednesday, after the tech giant beat Wall Street's expectations for revenue and user growth.

Meta also gave positive guidance for the first quarter and said it expects expenses for the whole year to be less than what was originally planned.

Why it matters: Investors don't think Meta will grow at the same breakneck speed it did before.

Meta made 4% less money than it did in the same quarter last year, but it didn't lose more than investors thought it would, which is one reason Wall Street liked the company's results.

Meta also said it would buy back $40 billion worth of its own stock, which is usually a good thing for shareholders.

The company said that it reached 2 billion daily active users across all of its apps for the first time in December. These apps include Facebook, Instagram, and WhatsApp.

The majority of its 2.9 billion users (67%) use at least one of its apps every day.

Meta's restructuring costs for the fourth quarter were $4.2 billion, and the company says it expects to spend another $1 billion on restructuring costs for the whole year.

Those costs were caused by a number of short-term changes to operations, such as severance payments to employees who were let go and early termination fees for office leases.

Between the lines: The company's virtual and augmented reality division continues to lose a lot of money.

Last quarter, Reality Labs lost $4.27 billion, which brought its total loss for the year to $13.71 billion. Last year, the unit made $2.15 billion in sales, which is slightly less than the $2.27 billion it made in 2021.

Be smart: The company is optimistic about how much money it will make in the first quarter. This is an important update, since Meta's competitor Snap Inc. told investors on Tuesday that it expects revenue to drop by 2% to 10% in the same time period.

The company has been losing money on Wall Street for a year, but its earnings on Wednesday broke that streak. In 2022, Meta's stock lost about 70% of its value.

Part of that drop was because the market for ads was slowing down, but investors were also worried about how quickly the company could make its big investments in building metaverses pay off.

What to keep an eye on: Meta seems to be putting more weight on artificial intelligence as a way to grow its profitable social media and messaging business, which is based on advertising.

Mark Zuckerberg, CEO of Facebook, said on an investor call on Wednesday that he wants Meta to be a leader in generative AI and use the technology to make images, videos, avatars, and 3D assets for all of its products.

"I do think that the way we build consumer products, focus on getting them to hundreds of millions or billions of people, and then focus on making money from them, is the right way to do things. It worked well for us, "he said.

"You can expect us to keep doing that in the future, including hopefully some of the new generative AI products or metaverse stuff we're working on. We'll do the same thing there as we did here."