Dec 18th, 2023 – In 2022, Meta faced a crisis, with its stock at a six-year low, declining sales, and challenges from TikTok. However, 2023 marked a significant turnaround, with Meta shares surging by 178%, poised to become its best year on record. The change is thanks to the CEO Zuckerberg’s new strategies, including substantial cost-cutting measures such as the reduction of over 20,000 jobs.
After three quarters of declining sales in 2022, Meta experienced a remarkable 23% growth in the third quarter of 2023, due to the recovery of digital advertising and the capture of market share from rivals like Alphabet.
The main drivers of the impressive recovery of the tech giant are two: the “change of attitude” of Zuckerberg, and Chinese advertisers support. The CEO’s shift in approach and his new propensity to listen to shareholder concerns rather than seemingly dismissing them made the difference; he is still firmly convinced that his company’s future is the metaverse, which he is still investing heavily in, but he has also refocused the business toward what really matters today, advertising.
He successfully redesigned his way of communicating with shareholders and dealing with their concerns and this led to positive outcomes for the company.
The other fundamental role was played by Chinese advertisers, like Temu or Shein, which made substantial investments in Meta’s platforms: these companies and their investments in ads led to a 44% year-over-year growth of the company itself.
Despite strong performances, challenges persist for Meta, including a volatile digital ad market, lawsuits alleging harm to children and the “niche status” of virtual reality. Indeed, it is true that the ability of the company to adapt to a changing reality, implement cost reductions and refocus on its core advertising business contributed to its recovery, but skepticism looms for 2024 as potential policy changes of platforms like Google may join the game.
Author: Ilaria Savignoni