The corporation Meta, which owns Facebook and Instagram, recently revealed its first annual sales decline since going public in 2012. However, the decline was less severe than anticipated, which caused its share price to jump.
The social media behemoth reported a 1% decline in sales to US$116.6 billion (RM493 billion) in 2022 while simultaneously announcing that Facebook had reached two billion daily users for the first time.
CEO and founder Mark Zuckerberg cited Meta's video Reels service's effectiveness in delivering short videos to people on Facebook and Instagram more effectively thanks to enhanced algorithms.
The Chinese-owned video-sharing app TikTok, which has proven to be a powerful challenger in luring young users away from once-dominant Instagram, competes aggressively with Meta.
According to Zuckerberg, the number of daily users of Facebook, Instagram, and WhatsApp is at an all-time high.
After adjustments to the iPhone made by Apple severely limited Meta's ability to target customers, Zuckerberg praised improving artificial intelligence (AI) to better distribute adverts.
An Efficiency Year
The 2022 results brought a close to a difficult year for Meta, which in November said it would fire 11,000 workers, or 13% of its workforce, in the biggest labor cut in the business's history.
The "Year of Efficiency" is the company's "management theme for 2023, and we're focusing on making a stronger and more agile organization," according to Zuckerberg.
According to Zuckerberg, Meta is striving to reduce the number of middle management levels and is also implementing AI techniques to increase engineer productivity.
He continued by saying that Meta will be more proactive when it comes to eliminating initiatives that are underperforming or not a priority.
The weakening economy, which is causing advertisers to scale down their marketing efforts, and Apple's data privacy regulations, which have limited the scope for ad personalization, have been bad for big digital platforms.
But Meta outperformed market expectations as cost-cutting began to pay off and the impact of iPhone privacy rules on ad targeting appeared to be lessening, according to a tweet from Wedbush analyst Dan Ives.
In a letter to investors discussing the results report, Baird Equity Research stated, "At first glance... Meta getting its mojo back."
Personalized marketing
When Apple started allowing iPhone customers to choose not to have their online behavior tracked by apps for the purpose of targeting adverts in 2021, it sent shockwaves through the industry.
Facebook and Instagram, whose revenue depends on highly targeted advertising, took a severe hit as a result.
The social media juggernaut will lose US$10 billion in revenue in 2022 as a result of Apple's policy, which has an impact on the accuracy of the advertising it sells and, consequently, its pricing, according to Meta last year.
In the two largest ad markets in the world—the United States and Europe—Apple's iPhones account for around 55% of the smartphone market in each region.
The business is also under fire for taking a big chance on the metaverse, which Meta hopes will be the next big thing in online gaming.
The subsidiary of Meta's Reality Labs, which creates the requisite VR headsets and software, reported an operating loss of US$4.28 billion in the final quarter of 2022, indicating that the bet has not yet paid off. This came after the prior quarters' significant losses.
According to Insider Intelligence analyst Debra Aho Williamson, "Mark Zuckerberg is going to have to confront an inconvenient reality: Virtual worlds are simply not what businesses or consumers want right now."
Investors penalized Meta last year, pushing the stock down an astounding two-thirds in just one year, but in 2023, the price has somewhat recovered.
The price of a share of Meta increased by more than 19% in after-hours trading to US$182.83.
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