Meta Stock Soars on First Revenue Growth in Nearly a Year, Despite Decline in Profits

Meta, the parent company of Facebook, announced its sales grew by 3% during the first quarter of 2023. This marks the end of a trend of three consecutive quarters of revenue declines, exceeding Wall Street's expectations and causing Meta shares to jump as much as 12% in after-hours trading.

Despite the increase in sales, Meta reported a decline in profits of almost a quarter compared to the same period last year, with $5.7 billion in profits. The price per advertisement, an indicator of the health of Meta's digital ad business, also decreased by 17% compared to the prior year.

To address these challenges, Meta has been restructuring in an effort to recover from heightened competition, recession fears, and the multibillion-dollar project to build a future version of the internet known as the metaverse. In November 2022, the company announced the elimination of 11,000 jobs, and in March 2023, it announced an additional 10,000 layoffs, shrinking Meta's workforce by 25%.

Despite the setbacks, Meta remains optimistic about the future, with Zuckerberg announcing that 2023 would be a "year of efficiency." The company expects revenue to continue growing in the current quarter compared to the prior year, and it slightly lowered its expectations for full-year expenses.

Meta has been playing up its focus on artificial intelligence (AI), with Zuckerberg stating that the company's AI work is driving good results across its apps and business. Meta's AI work includes efforts to build AI chat experiences in WhatsApp and Messenger, as well as visual creation tools for posts on Facebook and Instagram and advertisements.

In summary, Meta's first quarter revenue growth has buoyed investor optimism despite the decline in profits. The company's restructuring efforts and focus on AI suggest a strong commitment to future growth and innovation.