Recent Figures Suggest Meta Is Bouncing Back Again

The parent ad business of Facebook, Meta, is thriving again, while AI gives more sufficient support to its rise in capital spending, according to The Wall Street Journal.

Meta’s share price spiked by 20% after a very healthy last quarter of 2023, which saw the stock almost triple in value. This involved a big boost in share buyback and the company’s debut dividend. This positive news has raised Meta’s market value beyond $1 trillion, putting it in the same category as Apple, Amazon, Google-parent Alphabet, Microsoft, and Nvidia.

In 2021, when Meta CEO Mark Zuckerberg showed his interest in the metaverse, it wasn’t well received. Alarm bells went off with shareholders when the company made extreme shifts, like changing its name from Facebook to Meta and increasing its annual capital spend by around 80%. Virtual reality had previously not been a thing for the industry, but Zuckerberg wanted to follow his vision.

In February 2022, Meta had a grim outlook for its ad business, which only saw single-digit growth after a bump during the pandemic. This resulted in a drop of more than a quarter of its value in one day, but the downward spiral continued beyond. In November 2022, the company’s market value hit a low of $237 billion, which was 78% lower than its peak slightly over a year earlier.

After facing a bleak stint, Zuckerberg embarked on a mission to turn things around by launching a “year of efficiency,” which included significant staff layoffs of around 22% in 2023. However, despite these measures, Meta’s financial strategy isn’t exactly stringent as it continues to allocate heavy spending toward buybacks and dividends. In its fourth-quarter report released on Thursday, Meta raised its capital-expenditure forecast by $2 billion to $37 billion for 2024. 

This rise was associated with the company’s expansion of its data center as well as the need for servers and other elements powering its AI efforts. Zuckerberg mentioned during a call that he anticipates deploying around 350,000 of Nvidia’s expensive and highly sought-after H100 chips to enhance its network by the end of 2024.  

Amazon, Google, and Microsoft also indicated plans to increase capital spending this year in order to build out their own AI efforts.

Also on the horizon for Meta this year is an increased workforce. Meta’s chief financial officer, Susan Li, said Thursday that it “will further shift our workforce composition toward higher-cost technical roles.”

Zuckerberg has not lost hope or ambition in the metaverse. During the company’s earnings call, he referred to AI and the metaverse as “two major parts of our long-term vision.”