Meta Soars by Most in Decade, Adding $100 Billion in Value

Meta’s stock surged on Thursday after the company reported better-than-expected earnings, said it would buy back billions of dollars in its stock, and overcame a court challenge to its ambitions in the so-called metaverse.

Shares of the tech giant, the owner of Facebook, Instagram and WhatsApp, climbed more than 23 percent, its biggest daily gain in nearly 10 years. And it was a huge move for a company its size, adding nearly $100 billion in market value in a single day, or about as much as Citigroup’s entire market capitalization.

After ending last year with a loss of more than 60 percent, Meta’s stock is up more than 50 percent this year, as the mood among tech investors has brightened. The Nasdaq Composite, an index that includes many tech companies, including Meta, has risen nearly 20 percent this year.

Here is the latest on Meta:

• The company’s earnings beat expectations, and it announced a big buyback plan. Its revenue in the final three months of last year, just over $32 billion, was down 4 percent from a year ago but ahead of analysts’ forecasts. On Wednesday, the company also said that first-quarter sales would be better than expected and announced $40 billion in share buybacks, after buying $28 billion of its own shares last year.

• Flat — and even slightly down — is the new up. Despite falling revenue, Meta’s core products like Facebook and Instagram still put up strong sales amid a difficult economic climate. That buoyed Wall Street sentiment on the business, and batted back some of the more urgent concerns that Meta is in imminent danger from challengers like Apple, TikTok or other social media companies — for now, at least.

• Meta executives can cut costs when needed. For years, Meta spent lavishly on breakneck expansion, be it in the form of new offices, ballooning head count or future-facing technology with no immediate moneymaking plans. But in its latest quarter, the company proved it could find areas to trim when pressured to do so. Mark Zuckerberg, Meta’s chief executive, called 2023 “the year of efficiency” on an earnings call on Wednesday, including terminating a spate of office leases, redesigning data centers to cost less and laying off thousands of what he described were “managers managing managers.” Wall Street welcomed the moves.

• Meta can still bring new people to Facebook. The big blue Facebook app surpassed two billion daily active users for the first time last quarter, an enormous milestone and shocking given the service’s already large size. It’s a signal that while competition from other social networks is stiff, people are still using Facebook.

• Its virtual reality deal survived a legal challenge. On Wednesday, a federal judge rejected the Federal Trade Commission’s request to block Meta from spending $400 million to acquire a virtual reality start-up called Within, representing a major legal victory for the company as it invests heavily in the metaverse, where users work, play and consume content through virtual and augmented reality. (Less happily for Meta, a month ago European regulators ruled that it had illegally forced users to effectively accept personalized ads, fining the company more than $400 million and potentially forcing it to make costly changes to its ad business in the European Union.)

• Plenty of challenges remain. Meta faces setbacks in digital advertising as clients rein in spending because of higher interest rates and inflation. The company is also fighting to retain users drawn to newer apps like TikTok, the short-form video app that Mr. Zuckerberg considers one of his most formidable rivals. The billions that Meta is spending pursuing its founder’s vision of the metaverse may not pay off.

• Meta laid off more than 11,000 employees in November. The company reduced its work force by 13 percent in the round of layoffs, in what amounted to the most significant job cuts since its founding in 2004. Meta took a $4.2 billion restructuring charge for the fourth quarter, including costs for the early termination of office leases and severance for employees. The company expects another $1 billion in restructuring costs in 2023.