Tech Giants’ Troubles: Meta
Meta stocks surged more than twice their value since November 2022, but are trading 45% below their peak prices. Meta’s management has declared 2023 as “the year of effectiveness” adding positive sentiment to investors. The company announced $40 billion buyback. There are more reasons to watch the stock closely. Meta’s staff increased by 20% compared to last year’s numbers, making operational spending rise dramatically. Management already announced layoffs of 11,000 employees, but this will only have a financial effect at the end of Q1, or even Q2 of 2023. The company reported that it expects its active users to rise by 4.2% year-on-year to 3.74 billion, despite its significant user base. The rise of capital expenditures by 67% year-on-year to $32 billion is seen to be mixed as most of this funding goes to Reality Labs, a warm hole that is developing Metaverse and has recorded $4.3 billion losses during Q4 2022. Sooner or later this division has to deliver a profit, or it will likely be shut down by Mar Zuckerberg himself. Both scenarios would be a strong driver for Meta stocks. The company could spend the money more wisely, but no serious damage to its financials has been made so far. The Q4 2022 resulted in net cash inflows of $10 billion. Meta has survived the change of Apple’s iOS privacy policy that limited the abilities of apps to track investors that were estimated to wipe off $10 billion of Meta revenues. So, the company will also survive a possible failure of the Metaverse.
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