Meta CFO Susan Li said on a conference call with analysts that advertisers in China have increased their activity, targeting users and overseas markets, which the company believes is partly due to lower shipping costs and the easing of Covid-19 lockdowns.
In other words, Chinese companies spent a lot of money in the first three months of this year advertising on Facebook, targeting people living outside the country. This is a sign that the recent relaxation of zero-Covid policies indirectly benefits Meta, which wants to use the massive reach of Instagram and Facebook to find new customers.
Still, Meta sales grew just 3% year-over-year in 2022, reaching $28.65 billion, meaning there’s still plenty of volatility in the digital advertising market.
Meta also saw stronger demand in the quarter as the Russia-Ukraine war passed its one-year milestone in February, Li said. However, she is uncertain whether the rest of the year will go smoothly. She predicts a “volatile macro environment” and a “challenging regulatory environment” this year. The EU continues to impose tough data privacy regulations, which could impact Meta.
Still, the fact that Meta can turn things around after a tough period is reassuring enough for investors. The company’s stock rose nearly 12% in after-hours trading. CEO Mark Zuckerberg declared 2023 “the year of efficiency.” About 21,000 employees will be laid off by early summer. The latest round of layoffs will hit engineering positions, followed by the business team. Meta will resume hiring after May and plans to maintain headcount growth of 1% to 2% in 2024.
Zuckerberg has also shown no signs of slowing down his spending on virtual reality. Reality Labs, which develops virtual and augmented reality technologies for the metaverse, lost nearly $4 billion in the first quarter on revenue of $339 million. Meta’s CEO said virtual reality remains a core priority for Meta, even as the company works on new AI technology to support advertising and business messaging.
Zuckerberg confirmed that the information about Meta no longer focusing on the metaverse is incorrect. They will continue to focus on both AI and the metaverse because the two fields are related.
(According to CNBC)
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