Overnight, the gods returned to their places, and the sky in Silicon Valley was bright again.
After Microsoft refreshed its history two weeks ago and became the second listed company with a market capitalization of more than 3 trillion, Meta also ushered in the first highlight moment of 2024. As of February 2, Meta's stock price soared by more than 20% in a single day, and its market value soared by $200 billion, returning to the trillion club, setting a record for the highest single-day increase in the history of U.S. stocks. Zuckerberg's total worth of assets also reached $140 billion, surging by about $28 billion in a single day.
Stretching the timeline a little longer, Meta's stock price has risen by 168% over the past 12 months, which is extremely ferocious. At this time last year, the outside world was still discussing the possibility of ByteDance surpassing Meta and Zhang Yiming killing Zuckerberg. A year later, Byte CEO Liang Rubo continuously mentioned the "sense of crisis" in his internal speech, while Meta was full of celebration, busy paying dividends, and the gears of fate inadvertently completed another rotation.
Behind the strong rally, Meta has indeed had an extraordinary year:The performance has recovered significantly, and the advertising business still acts as the most stable cash cow of the group; The road to the metaverse has gone through twists and turns, but Zuckerberg has always been unwilling to give up and is still looking for various new directions; Catch the AI express train and look forward to more new tracks such as supercomputing centers and AI chips.
Zuckerberg once said in an interview with Forbes magazine, "It's not your enemies who decide your fate, it's your own actions." In the past year, Meta has practiced this principle with practical actions - Internet giants want to change their lives against the sky, and they can only rely on themselves after all.
*From Unsplash).
Increased revenue and profits, and the performance boosted Meta's stock price to take off
After January 2**, most analysts pointed the fuse of the stock price surge to a new decision of Meta - dividends.
Zuckerberg's management said at the fourth-quarter earnings conference** that it will pay a cash dividend of 50 cents to Class A and B common shareholders on a quarterly basis starting in March this year, which is also the first dividend payout since Meta went public. Agency calculations show that Zuckerberg alone can get more than $700 million in pre-tax income from this round of dividends.
A number of investment banks also said that the large dividend payment shows that the board of directors is satisfied with the company's operating conditions, and Meta must have exceeded expectations in the past fiscal year to achieve performance indicators. Releasing this positive signal to the outside world is also conducive to stimulating capital inflows and stabilizing shareholder confidence. For example, investment banks such as Goldman Sachs, Barclays, and Citigroup updated their research reports as soon as possible and raised Meta's target price to more than $500.
However, the dividend payout is only one of the triggers. Investor confidence is always supported by performance. Looking back at Meta's financial metrics over the past year, the progress is evident and everything is moving in a good direction.
First of all, revenue continues to grow, and the growth rate continues to increase, and the next quarter's performance guidance far exceeds market expectations.
According to the financial report, Meta's revenue in the past four quarters recorded 286500 million, 32 billion, 341500 million and 401US$100 million, a year-on-year increase. 2% and 247%, full of stamina in the second half of the year. For the 2024 fiscal year, Meta executives are full of confidence, setting the first-quarter revenue guidance of $34.5 billion to $37 billion, higher than the $33.6 billion previously expected by analysts, and the corresponding growth rate is between 20% and 27%, much higher than the performance of the same period last year.
It should be noted that in the second half of last year, investment banks have significantly raised Meta's revenue forecast, but the final result is still a cut higher. Taking the just-announced fourth-quarter results as an example, the market expectation is 390800 million US dollars, with a growth rate of 215%, which is $1 billion and 32%。
Second, profits have been repaired, and spending guidance for the next quarter has been revised slightly upward, but overall manageable.
According to the financial report, Meta's net profit in the four quarters of last year was 57100 million, 77900 million, 112100 million and 140200 million, and the corresponding net profit margin was recorded respectively. 8% and 349%, which exceeded market expectations in the next three quarters. In addition to net profit, earnings per share, gross profit margin and other indicators have also been significantly improved, and the company's operation has returned to the right track.
Profits** naturally benefit from effective cost control. According to the data, Meta's total spending in the last fiscal year was about $106.2 billion, in line with its previous spending guidance. Among them, after several vigorous layoffs, Meta has reduced a total of about 20,000 employees, successfully reducing spending on manpower and welfare. However, as investment in innovative businesses such as AI gradually increased in the second half of the year, R&D expenses also returned to growth.
Heading towards 2024, management has developed a moderately aggressive spending plan, with total annual expenditures expected to be $94 billion to $99 billion and capital expenditures to be $30 billion to $37 billion. Prior to that, capital expenditures were widely expected to be within $32 billion.
It can be seen that Meta's cost reduction and efficiency increase have basically come to an end. Next, it's time to aggressively expand.
The secret of advertising recovery: the general environment is picking up, and the platform is striving to innovate
As mentioned above, Meta can spend a year to complete self-redemption, and the warming of the general environment is one reason, but the most important thing is its own efforts. The secret of the counterattack must return to the business, back to the action line of the past year.
In Meta's business landscape, advertising is undoubtedly the most core part, and it has not changed for so many years. According to the financial report, the revenue of Meta's advertising business in the past four quarters was 28.1 billion, 31.5 billion, 33.6 billion and 38.7 billion US dollars, respectively, a year-on-year increase. 5% and 238%, also in the second half of the year, the growth rate is rising.
In the second half of last year, the recovery of the U.S. Internet advertising market was visible to the naked eye, and the performance of Google, Amazon and other major manufacturers also proved this. According to a report by GroupM, the size of the U.S. internet advertising market will grow by about 5% year-on-year in 20231% and will continue to grow at a similar rate this year.
metaThe reason why it can enjoy more recovery dividends than Google and Amazon is that it has achieved higher user growth.
According to the latest statistics released by Meltwater, as of the end of January this year, the total number of users on Facebook and Instagram reached 38With 400 million, they are the two social apps with the highest number of users in the world. Among them, Instagram has performed more prominently in the past year, Facebook's MAU growth rate has lagged behind the average, and WhatsApp has also achieved good growth results.
instagramThe progress made by WhatsApp is largely due to the team's ability to learn: especially to steal teachers from TikTok, and to infiltrate fields such as short-lived, life services and even shopping.
In September last year, Meta announced an update to WhatsApp, which Zuckerberg himself personally announced at the 2023 Meta Global Business Information Conference. Zuckerberg is excited about the new changes, including the addition of WhatsApp Flows, the opening of paid authentication services to business users, and the rollout of merchant payments to India, Brazil, and more.
The effect of WhatsApp Flows is immediate. This function is similar to the mini-program model of WeChat, Alipay and other apps, and Meta encourages enterprises to launch through this new scenario, and extract a share according to the number of sessions, which is equivalent to adding a revenue generation channel for WhatsApp. The improvement of merchant authentication and transaction functions is also for the convenience of merchants and users, and to improve the conversion rate.
instagramIt has been a great success on the road of shortening, and even has the confidence to be anti-customer and face TikTok head-on.
As early as June 2021, Instagram launched the short ** section "REELS", and opened it to global users in 2022, but it has been tepid in the early days.
However, Meta did not lose heart and insisted on investing a lot of resources. Not only does it provide the most ** volume in the Instagram station, but also diverts traffic through applications such as Facebook, and even revises Instagram in the face of the doubts of the majority of users, advances the REELS entrance, and continuously increases the traffic tilt of short ** content.
Long-term investment does have an effect, and users have slowly accepted the shortening of Instagram and the existence of REELS. In a recent interview, the manager of LaterBlog Social revealed that since the launch of the REELS channel, the user interaction of his account has increased by 280%. And according to Zuckerberg's earnings conference in the third quarter of last year, the number of user hours driven by REELS increased by more than 40%.
In the advertising industry, if there are users, there will be traffic, and if there is traffic, you can make money. Morgan Stanley's statistics show that in the past year, Meta's advertising business has soared in volume and price, and user growth has brought higher impressions, which has also given the platform the confidence to raise the charging standard. Among them, the second and third quarters of advertising impressions increased by 34% and 31% year-on-year, respectively, which is the best performance since the second quarter of 2021.
It is said that the decline of Silicon Valley giants is inevitable, and Meta has proved with actions that as long as its strength can stand the test, it is not a dream to hit the bottom.
Both the metaverse and large models are needed, and the meta ceiling is higher?
Of course, Meta doesn't get good results on every attempt.
In July last year, Meta launched Threads, a social app that benchmarks Twitter, setting a series of records such as the number of users exceeding 6 million on the day of launch and 100 million in 5 days, far better than ChatGPT, which was popular in the first half of the year. But this series of jaw-dropping data is achieved by relying on the deep binding with the Instagram account and the overwhelming propaganda campaign, and it cannot be continued at all.
According to Sensor Tower, Threads users saw an average 50% drop in user time in the week of July 17 last year, with DAUs also declining in some regions. User retention has become a big issue, not to mention revenue generation later. It is still unknown whether threads can get rid of the fate of being at the peak of their debut and stopping their meals as soon as they become popular.
This case is also a wake-up call for Meta: even if it returns to expansion, it must remain cautious and no longer blindly launch new projects. Otherwise, it is likely to suffer a new round of cost reduction and efficiency increase. Among the new businesses that need to be invested, the metaverse and AI are the focus of Meta now and in the future.
Let's start with the state of the metaverse. No matter how the team changes, anyone with a discerning eye can see that Zuckerberg has never given up on his metaverse dream. Even when the performance recovery momentum in the first half of the year was not so strong, he did not forget to emphasize that he would maintain his investment in the metaverse at the financial report. However, the current strategy has become more pragmatic, reducing the investment in high-cost hardware business and focusing on content and software.
Nick Clegg, head of global affairs at Meta, said at the beginning of last year that Meta's metaverse business will be monetized through advertising, e-commerce and other forms in the future, weakening its dependence on hardware. At the same time, he also encouraged more developers and creators to join the ranks of co-creation and provide richer content.
Then look at the state of the AI business, which Zuckerberg also attaches great importance to. Judging from the dynamics of the past year, Meta has two main points: one is user-oriented AI applications, and the other is supporting facilities such as chips and supercomputing centers that can improve computing power.
Meta's requirements for AI computing power have always been extremely high. According to Zuckerberg, Meta will deploy more than 350,000 NVIDIA H100s to train large models by the end of this year. According to Omdia, Meta has purchased at least three times as many H100s in the past year as technology companies other than Microsoft.
However, instead of relying on NVIDIA, Meta obviously wants to strengthen its self-research strength and take its destiny into its own hands. In May last year, Zuckerberg revealed that Meta was building a new artificial intelligence data center and investing a lot of money in the research and development of AI inference chips. At the end of January this year, Meta's official spokesperson revealed that the second-generation self-developed AI chip Artemis will be put into production within this year.
There is no more news about Artemis yet, but it is reported that the previous generation product MTIA V1 uses TSMC's 7nm advanced process technology and runs at 800MHz, and the performance of the second-generation product will definitely be greatly improved on this basis.
It is worth mentioning that, according to Meta's concept, the improvement of computing power will not only serve large models, but also help the metaverse, advertising and other causes. Zuckerberg has said that he will develop a new generation of generative AI coding assistants with the help of self-developed chips and supercomputing centers, and then provide support for metaverse software development and community operations. In addition, with AI-assisted promotion, Meta advertising has seen a 32% increase in return on spend and a 17% reduction in costs.
In the coming period, the linkage between advertising, metaverse, and AI will definitely be closer, and Meta is unwilling to give up any money-making opportunity. While the 20% skyrocketing myth is difficult to replicate, the outlook for these businesses is still worth looking forward to as long as they are properly aligned.