Meta Declares ‘Year of Efficiency’ as Revenue Stagnates

We’re in the middle of Chinese New Year celebrations at the start of the Year of the Rabbit. At Meta Platforms, though, it’s the “year of efficiency,” as CEO Mark Zuckerberg declared Wednesday on announcing fourth-quarter results. Investors such as Altimeter Capital, which last fall called on Meta to streamline, will be happy. It’s just a pity that Meta, like much of big tech, appears to have been run with so little regard for efficiency in the past that it needs to make a theme of it for the year!

But given that revenue growth has disappeared, even as expenses have been expanding at a 20%-odd rate, something had to change. Meta’s profits were cut in half in the fourth quarter, not a trend the company could get away with for much longer. Remarkably, though, despite its declaration of a year of efficiency, Meta is still projecting expenses will grow between 1.5% and 8% in 2023 from last year. And as it projected first-quarter revenue would be roughly in line with that of the year-earlier quarter, the higher expense outlook implies profits could decline further this year. Perhaps Meta is optimistic that revenue growth will pick up later in the year. Even if that’s the case, you have to wonder why it couldn’t at least keep expenses flat from 2022 levels.