Meta shares surge as Facebook returns to user growth

A prolonged slowdown would make it tougher for the company to justify Mr Zuckerberg’s expensive, virtual-reality-fuelled vision of the metaverse, a business that won’t bring in profit for years – if ever. Meta said that in light of the revenue outlook, it is paring its spending plans for the year, to $US87 billion to $US92 billion from a previous target of as much as $US95 billion.

Sales in the current period will be $US28 billion to $US30 billion, Meta said Wednesday (Thursday AEST) in a statement, compared with the $US30.7 billion analysts had predicted on average. Again, the company pointed to the ongoing war in Ukraine as a factor.

“This outlook reflects a continuation of the trends impacting revenue growth in the first quarter, including softness in the back half of the first quarter that coincided with the war in Ukraine,” the company said in the statement.

Net income in the first quarter was $US7.47 billion, or $US2.72 a share. Analysts had estimated earnings of $US2.56 per share.

Shares of Menlo Park, California-based Meta climbed as high as $US204.55 in extended trading following the report. They had slipped 3.3 per cent to $US174.95 at Wednesday’s close in New York.

The company in the holiday quarter reported that daily users for its core Facebook service declined slightly for the first time ever, raising the possibility that the main social network had peaked in popularity.

In October, Mr Zuckerberg said that Facebook would focus on attracting “young people” to the service as a way to combat the rise of TikTok and other competing products. That means prioritising Reels, a copycat video format on Meta-owned Instagram and Facebook. While usage of Reels is growing quickly, the company’s advertisers haven’t been as fast to switch to the new format.

Bloomberg