Meta Reports Fourth Quarter and Full Year 2023 Results | Hacker News Reader

Meta Reports Fourth Quarter and Full Year 2023 Results

investor.fb.com

98 pointsmfiguiere124 comments

Meta is a good opportunity learn that a good time to buy is when people really dump on a company. Jim Cramer, many people on HN, …

In Oct 2022, I was jumping up and down saying “the P/E is 9!” People just hating on Zuckerberg.

https://news.ycombinator.com/item?id=33366322

Stop listening to anything else other than your own. Just read the 10Q. After cutting the fat, its about 8-10 pages, every 3 months. Lets say you follow 20 companies. That about the size of one book every three months. Not an entertaining read, but definitely enriching one.

> Just read the 10Q.

Do you have suggestions/resources around what in a 10Q a n00b like me should be looking for?

The 10-q is there in the SEC website[1]. The summery is a quick read[2]. Just read it like you would read a textbook. Read the same for APPL, GOOG, AMZN. Do the same for two other sectors. In total about 20 companies. Very quickly you see the patterns emerge.

In the context META, here is a quick summary Besides the sequential increases of MAU, DAU, DAP, MAP, One thing that stands out to me is:

"We anticipate our full-year 2024 capital expenditures will be in the range of $30-35 billion, with growth driven by investments in servers, including both non-artificial intelligence (AI) and AI hardware, and data centers as we ramp up construction on sites with the new data center architecture we announced late last year."

Thats a lot of investment mostly in NVDA hardware. Expect NVDA to rise. This also means good for other suppliers, AMD, INTC, TSMC. The benefit for META will be apparent in a few quarters.

Good Luck!

[1]: https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/dat... [2]: https://s21.q4cdn.com/399680738/files/doc_earnings/2023/q3/e...

Thank you for this info and including links. Looking through the full 10Q[1] I don't see the summary[2] or link to it. How do you go about finding summaries for other 10Qs from other companies? I was trying to work backwards to find the summary from the full 10Q so I could do the same for other companies.

www.meta.com -> For investors(it is at the bottom). It will take you here[1]. There should be a presentation, short form earnings release.

[1]:https://investor.fb.com/home/default.aspx

> Expect NVDA to rise.

But has it already risen to account for that? It's up 190% vs 1 year ago

And META is up 109% vs 1 year ago

Is roughly this level of sophistication enough to beat the S&P 500?

Jim Cramer recommended getting in on Meta around 220 IIRC and then it dropped over 50% and he cried because on his recommendation people lost half their investment.

Exiting at a loss is often the 'smart' call.

Bill Ackman did basically the same with Netlfix for a 400 million dollar loss: https://variety.com/2022/digital/news/bill-ackman-sells-netf...

He'd be up huge if he held, but he 'paper handed'. Is he a dumb guy?

> He'd be up huge if he held, but he 'paper handed'. Is he a dumb guy

ive come to believe its often a matter of solvency, theres only so long you can keep that money invested before people start wanting/needing it back. Especially with large economic shifts that weve been seeing.

I don’t think solvency was an issue here but another way of getting to the same place is that he felt he could deploy the capital more effectively elsewhere. He made a bet on Netflix because he thought he had some alpha. After he lost a third of it he had less faith in his original thesis and thus his allocation priorities changed.

Or at least that’s the story he’d want to tell

Just for context Ackman’s 1.1B purchase would be worth about 2.25B today if he hadn’t sold it for 700M

Of course that doesn’t mean it was a dumb trade but his rationale in the letter doesn’t make a lot of sense to me. It has the vibe of something you would come up with if you needed to sound smart justifying a decision you had already made emotionally

> Jim Cramer recommended getting in on Meta around 220 IIRC and then it dropped over 50% and he cried because on his recommendation people lost half their investment.

Wait, someone actually traded on Cramer's advice? Please tell me this is a joke.

TBH I'm not 100% sure what lesson to take from this. If in 2022, you thought that a) DAU across the entire family of apps was as high as it ever was going to be and b) that the broader economy was about to enter a recession, causing marketing spend to plummet, is a P/E of 9 still a bargain? Isn't that supposed to reflect potential for future growth, and if all the eggs were in the metaverse basket...

Large cap stocks that have firmly exited the growth phase generally have a p/e of around 15. As long as you dont think profits will decrease a p/e of 9 is generally a hard buy.

Note that Intel had a P/E of about 9 as of March 2021 - I remember because I bought it. Three years later, with the stock having gone down by ~8%, its P/E is now 108. Oftentimes when investors discount a stock relative to earnings, it's because they expect earnings will decrease.

Yes a P/E of 9 is still a bargain.

A PE of 9 is comparable to lows of 2009. This is indicative of dire pessimism and unjustified.

As others have already pointed out, you are rewriting history.

You said:

The PE of 9 is low which is unusual for these companies.

And:

that PE shouldn’t be 9 unless revenue is expected to drop quite a lot

Are you saying that this was your way of yelling from the rooftops that Meta was a screaming buy? If so, how many shares did you pick up back then?

You won't hear back from this person IMO. They don't know anything special else they'd be the richest person on Earth.

I didn't agree with the doomerism for Meta either but just as easily something wild could change next week that sinks the stock.

Well anybody will get wrong assumption on FB if he doesn't see the impact FB is having outside USA, especially in developing countries. it's the only game in town, a complete social package. Tiktok is another but it competes in one specific side.

It's true, but I think it will sink again and many will be left holding the bag after buying the hype.

I don't see what they've really done differently in the last 6-12 to be really honest. Maybe "AI" will save the Metaverse is about all I've heard?

There's nothing much else going on social media wise so it will be a safe bet, but why should it maintain that price forever ?

I've always been a fan of the "do the opposite of what Jim Cramer says" method for investing.

They had an ETF that did this called SJIM but just announced it's closing: https://www.etf.com/sections/news/inverse-jim-cramer-etf-shu...

This is a popular conversation topic, but not a great investment strategy.

https://www.crameretfs.com/

Somebody made an ETF of that but it doesn't perform that well. https://finance.yahoo.com/quote/SJIM/

it's referred to as Inverse Cramer

At the time Meta had greater profits than even Walmart, thanks to very high profit margins. It was insanely cheap. The market was pricing in a disaster in which Metaverse losses somehow destroy the company, or loss of market share to TikTok. Neither of those happened.

I think meta's dip was always much more about Mark being unimpeachable than anything else. The market new $10 billion a year for the metaverse was a drop in the bucket, I think everyone was reasonably confident that meta would have a tiktok competitor. The issue was that investors thought Mark making "bad" decisions now meant he would continue to. Instead he instituted massive layoffs to show investors that he is thinking of them, so the stock went back up.

I think meta's biggest non mark issue was the apple tracking stuff that cost them billions of dollars.

Is that the lesson? There's a ton of sky-is-falling commentary/editorials on Seeking Alpha, YouTube, et. al. It's absolutely impossible to see fact from feeling.

Maybe it's time to start analyzing 10qs, I'm telling myself.

You also said:

>For the PE to be 20 the stock [Meta] would have to more than double and that’s not going to happen in this environment

https://news.ycombinator.com/item?id=33367276

Is the market really that dumb? I'm increasingly thinking about becoming an active investor.

Sophisticated money is generally not. The average retail investor absolutely is. Most retail investors invest based on emotion not on fact. A lot of tech company employees justify their emotions as providing them an edge because they're in the industry, but they often likewise get hung up on factors that they find emotionally relevant but aren't actually market relevant factors.

Look at this other comment https://news.ycombinator.com/item?id=39222007 in this thread. A lot of it is just idle speculation based on the commenter's personal values. These are the analyses that drive retail investors to invest. I don't mean to pick on this commenter specifically; I just felt it to be very illustrative of the kind of analysis that the average tech person does to justify or not justify an investment.

“Techies aren’t as smart as they think they are” is always something that I’ll happily get behind.

I think we're plenty smart for real.

But where we go wrong is thinking that our tech smarts translate to other fields like finance.

Personally I know it's one of my weak spots so I stay far far from investments.

The question is how smart is the break-even investor, i.e. the person I have to beat to win in this game.

Investing is about reading the facts, not the tea leaves. Sometimes the facts aren't enough to predict the future. See Bill Ackman trying to catch Netflix falling and exiting at a loss soon after: https://variety.com/2022/digital/news/bill-ackman-sells-netf...

Had a decade ago you bought and held the FAMNG index of companies, you would have beat pretty much every hedge fund and active manager, save for Renaissance Technologies....

Hindsight is 20-20 though. If you had bought Apple at the trough, you would have done fabulously well.

Some people have foresight. He made $500m. https://www.amazon.com/Mobile-Wave-Intelligence-Change-Every...

Which stock do you recommend now?! ;-)

I’m a fan of Intel turning it around, becoming a fab, etc. However, I would seek a lot of input on this one. It requires a lot of capital and could take a while.

For now it's just promises from a failing giant, no? What makes you think they will suddenly be able to innovate after decade long stagnation and being beaten by AMD and NVidia? It's not like you can change company culture with simple "but now we will try". Firing most of the management and substituting them with engineers would be a first step. Until then they will fall even further behind imo.

> we anticipate growth in payroll expenses as we work down our current hiring underrun and add incremental talent to support priority areas in 2024, which we expect will further shift our workforce composition toward higher-cost technical roles.

Sounds like a company that really needed to reduce its workforce to achieve greater efficiency. It's totally not because they wanted to fire people without firing people. Nope.

Love him or hate him, Zuck keeps defying the doubters. Even as far back as the IPO he was dismissed for his youth. Meta/Facebook was dismissed as a fad or the next myspace. He knew Meta needed to be streamlined, and he achieved this.

Closing some positions doesn't imply that one should stop hiring for those that remain open and unfilled. What sinister motive are you implying?

Firing people without firing people? You are aware of the two major rounds of layoffs during the previous two years? Both of which came with extremely generous severance?

Yes I was referring those rounds of layoffs. A generous severance isn't a job. Nor does it allow those on work-visas to remain.

Sure but saying they were "fired without being fired" implies that the company did some kind of covert layoff through underhanded means, e.g. giving people low performance reviews in order to get them to quit, or forcing designated WFH employees to come back to the office or be fired, etc.

it's exactly what Zuckerberg said right at the start - they want more engineers and less managers / other support roles. There are fewer engineers but they cost more.

We're an 8 digit ARR DTC brand, not suprised at these results. After the apple/facebook tracking issues we took our spend down to zero as it wasn't working. Facebook has fixed their alogorithms though and full credit to them our spend is working again and they are back to getting the lion share of our spend. Full credit to them!

I started joking with a friend when it hit $300-ish a share in this recent run-up like "wow imagine if we had invested when it dropped to $100 we'd be RIIIICH!!"

Now it's up another 50% since we started joking about that so...

Realistically, I'm much more attached to slow and steady index investing but FB stock is one I always like to follow along with and I (mostly jokingly) kick myself for not having the foresight when everyone was claiming doom and gloom a year ago that "nah, there's a cockroach (in the survivalist way, not to sound insulting) here..."

Advertisers have like 2.5 places to put their money right now, and FB is one of them.

Yup. Meta's properties have near-dominance of the web, save for Google.

This is why you have to sometimes hold your nose and buy. The rational part of your brain says "it is overextended" . Yes, but a lot of great investments seem that way, like Nvidia or Microsoft.

The Metaverse losses were bad but only temporary, but the media narrative was that it would doom Meta.

wtf..up 11% in AH to $440.

Which is on top of 300% gains from 2022 lows. Those YouTube Meta obituaries were the worst possible timing ever. (Looking at you Coldfusion https://www.youtube.com/watch?v=g_i1alH5TrA )

It goes to show how just because something appears overbought does not mean it cannot keep going higher

Meta firing on all cylinders: Near-total dominance of social networking, chat, mobile ads, and now AI. Those mobile ads are so expensive, and multinationals and other large companies spending so much $ on clicks and impressions. High inflation pure top line growth. Crazy. It's hard to find a company that that is in a better position than Meta now. Maybe Nvidia.

disclosure: am investor

It's one of those stocks that people love to emotionally say is "over" without quantification. And very loose analysis like "I don't use facebook.com anymore" or "metaverse VR is not good".

I personally love the cycles of discount every 3-5 years when the new outrage happens, and just look at the fundamental numbers on the business before buying a few more shares.

Btw, not sure who Coldfusion is, but looks like they got 1.7M views on that video. So however "bad" the analysis is, it sure looks like a good way for him to make money.

Clickbait = more views and revenue for video creator. Bad investment advice for everyone else.

> It's hard to find a company that that is in a better position than Meta now.

Meta has no browser. No mobile phone OS. No big email userbase (where the valuable business stuff is sent, not the "zomg lulz cats pictures"). I think Apple, Microsoft and Google are all way better positioned than Meta.

> Near-total dominance of social networking, chat, mobile ads, and now AI.

Social networking, OK. Although LinkedIn is MS and, once again, that's where the real juicy stuff is. Mobile ads: dunno, maybe. But around me everybody has Telegram (EU here and it's not the first country in the EU where I notice that). Telegram is growing quickly: 800 MAU. AI: I know Meta just ordered a shitload of big stuff from NVidia, for billions and billions... But it seems to me OpenAI is still ahead. Is Meta even ahead of Mistral/Mixtral? (a tiny company with a mere 300 million EUR in funding).

That said I did buy Meta at around $100 when the tech crash happened. I hate Meta, but now the Zuck is working for me ; )

In all honestly, I recently launched two campaigns. One on Meta and one on Google. It's for a niche app I worked on as part of a European Project. Meta went straight up and is giving me good traffic. Google keeps refusing it saying the messaging is unclear. I've been trying for a week to update the messaging and description to make it 'clearer', and they keep rejecting it. After yesterday I gave up on Google, I have no idea what they mean and what they want.

I got banned for basically life from Google adwords after I messed up some sort of payment configuration. Literally used an expired credit card on accident/something like that. Instant ban with no communication

Amazon burns and churns through employees, Google burns and churns through paying customers. Guess which one holds better in a bad labor market.

Same experience trying to advertise an Airbnb. Went round and round with a Google ad "support consultant" as they messed up our campaign multiple times, meanwhile happily spending hundreds and getting ROI for it on Instagram.

> Went round and round with a Google ad "support consultant"

Apparently those in the industry know all about them and advise their clients to stay away from them.

Like you I wish I knew this before they ruined our account so bad we needed to start a new pixel with an agency.

Wait, what ?

There are ads on Airbnb? As in, I am looking for a place to stay and there are ads shown to me?

I use Airbnb but I also use ublock so … I would otherwise see ads?

About a decade ago, when facebook(after IPOing at 38) came down to 20, I was in a bus speaking with a friend about buying a bit and holding it forever(like Buffet). He laughed at me. A lot of folks in the bus gave me strange looks.

So far it has been the best decision(investment wise) for me.

The only effort I did was to read their IPO prospectus and the latest 10q(at that time).

In 2011 after selling my company to Goog a salesperson from Goldman called me trying to sell me pre IPO Facebook stock. I told him I think FB is s fad, and given that he works for Goldman, they wouldn't sell it if they thought it had value.

I was not a good investor back then.

I have been following Meta/Facebook since 2008 when that story broke of Microsoft's initial investment. Long-time investor.

Crazy numbers. Still can't believe Facebook is growing daily and monthly users for the last 15 years. Its low to mid single digits but still.

Headcount down 22% you while expenses slightly up you (1%)

Looks like money going into R&D and maybe salaries?

Likely CapEx spend on GPU for AI training, similar to what all other FAANG companies are doing now (esp Microsoft and Google, along with Meta). Mark did announce a few weeks ago they would be buying 600K worth of H100-equivalent GPUs, that's a few billion in CapEx.

Facebook growing users still is easily the most mind boggling thing in tech right now to me. I was absolutely convinced it would plateau like 5 years ago but they just keep finding more people to download their app. Theyre claiming that half the world uses their apps at least once a month, hard for me to wrap my head around that.

Imagine those employees who got hired with $1M of RSU when the stock was $90.

I was hired at $300+, weeks before the plunge. It wasn’t fun realizing that pushing my start date would have pushed the issuance to the lower price.

That was when the company was rescinding previous offers and laying off newish employees -- so there aren't a whole lot who stuck around long enough to reap the rewards.

Yeah now they're even more still rich!

Recruiting does not update their stock that often especially when it’s on a tear. Also, they assign RSUs based on projections, not current value

That's not true at all. At Meta your RSUs are based off the average share price for the month before your start date

yeah, puts crypto gains to shame

Interesting that they started a dividend. Facebook has been doing heavy buybacks for a while now. Wonder why they started a dividend instead of plowing more into buybacks. Perhaps Mark wanted some cash without selling and disliked the current interest rates? Im reading he has 350 million shares so this is a 175 mil payout for him.

They also got approval for another $50b in buybacks. They're just using multiple avenues of getting money back to investors.

Meta always likes to play the victim card about the effect of Apple's anti-tracking measures but it's ended up being a win for them. Companies have been moving to server side conversion tracking and browser fingerprinting which actually improves the ad targeting. Also it's helped build a moat that is making life harder for smaller ad players to compete.

Also Threads has been a massive score for them. It's allowed Instagram to focus on Reels to compete with TikTok and fed in a ton of new behavioural attributes. Plus ad spend amongst large brands surely must have moved to Meta after leaving Twitter/X.

It's just amazing how things have turned around for Zuck during the last year.

Meta has staged probably the biggest corporate comeback ever. $1 trillion of market value created in the past year alone. Threads is a success by targeting high-SES, high-educated demographic (sorta like Pinterest). The opposite of most social networks.

It’s impressive but I don’t think it beats Apple, which was pretty close to dead at one point.

It’s almost like it is good business to not openly antagonize half your potential users. Someone understands power law networks (and someone does not…).

Elon won’t be happy…

Apple's App Tracking Transparency policy has had a measurable impact on businesses that rely on ads for their sales.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4698374

Exactly. If before small business would have to pay Meta $.10 to get 100 targeted people in the door, that same company now has to pay $.30 to show that same ad to enough randos that those 100 interested people get on the door.

Meta was actually being sincere when they said it would hurt small business because otherwise it makes them TON of money. Everyone just fell into the cynicism trap and didn't believe Mark.

So Threads is basically the old insta for pictures now?

Instagram is half-images/half-video and Threads is half-images/half-text.

And yeah all of the popular photographers were on Threads from the beginning since photo carousel support was one of the first features that was implemented.

Insta is only half video since a year because they crammed in this reel nonsense to try and out-tiktok TikTok. And fail.

I don't want a "for you" feed and I don't want reels but they keep sticking them in my face. And everyone is now posting photos as video because the algorithm favours it.

Nice explanation!

Big tech moves like crypto. This stock market volatility is absolutely insane. I wonder if we ever go back to pre-covid times when the market didn't run up and crash every 3 months.

Early in 2023, I decided to do stock picking for the first time. I thought 3 stocks were underrated - Intel, amd and meta.

But the responsible investor that I was, I put in no more than a few thousand in each.

On one hand, I'm really glad to see how well that panned out. On the other hand, really kicking myself for not having more confidence in my own intuitions.

Big percent on a low base feels like a pyrric victory.

You made the best decision you could at the time, and the outcome was a best-case scenario! That's a real victory.

Thanks, I know it doesn't sound like much, but your affirmation makes me feel better.

I have rebalanced my internal priors to be more heavily weighted on my intuition than the 'market vibes'. Let's see how 2024 pans out.

What's your intuition for 2024?

Dahy-um. That's some real money and margins.

Just listening to the chatter -- posts, new stories, etc., I was kind of expecting to see some kind of meta doom. But they are rolling in dough. It's just pumping in.

I'm pretty skeptical of their metaverse ambitions, but it doesn't seem like it's going to be tanking the company. More like a really fun diversion to pass the time while the money pours in.

Once again, It is now clear that the death of Meta Platforms Inc. was totally exaggerated and almost no-one bought the stock when it crashed to $89 when everyone was screaming that 'it was dying'.

It is just business as usual. [0][1] and up 300%+ since ignoring the widespread FUD and buying the stock at $89 - $90.

[0] https://news.ycombinator.com/item?id=31832439

[1] https://news.ycombinator.com/item?id=32256465

Same here. Meta staged probably the greatest corporate recovery ever. $1 trillion of market capitalization created in a single year. The metaverse losses were bad, yes, but were not going to sink the business.

Layoff employeees and reward shareholders with dividends!

While, credit is due to Zuck and his team. Much of the turnaround was due to investor pressure to shrink the headcount dramatically and take the foot off the gas for VR.

All they did was put more ads in the feed.

>100% increase in operating margin from 22 to 23, not bad

Remember when Meta was dead a year or so ago ? lol

> Revenue was $40.11 billion and $134.90 billion, an increase of 25% and 16% year-over-year for the fourth quarter and full year 2023, respectively

> Facebook daily active users (DAUs) – DAUs were 2.11 billion on average for December 2023, an increase of 6% year-over-year

Incomprehensible numbers ...

That seems extremely high for quite a boring service indeed. But it's also a global service so people in different countries may have a different experience.

Nowadays, Facebook provides no value to me. I don't like it. Still, I probably check it a few times a day when I'm procrastinating. I read the updates of the few acquaintances that still post on it. And I'm tricked into watching a few reels. A few groups are also interesting.

Ironically, I found their ads to be quite relevant. They went from boring t-shirts and gadgets to things that I could actually be interested in.

I live in the US. FB Groups have really become useful over the last 1-2 years. Very useful for connecting with local musicians, planning trips around concerts, discussing immigration related worries and making fun of soccer players. Feels like it's basically becoming an easier-to-use reddit.

Also, unrelated I've started seeing erotic content on suggested reels. These low-quality videos have hundreds of comments and millions of views. All contributing to fb usage.

Facebook has been my "Oh my god, I'm an out of touch old man" warning message.

I honestly don't understand Facebook and Instagram and the rest of their products. I don't use them and I don't know why I'd use them. I truly don't understand what people get out of them. Yet the numbers can't be denied. Over 2 billion active daily. As OP put it, it's totally incomprehensible! Well done.

I thought Facebook was really good until they moved from the plain timeline to the algorithmic feed.

It was a great way to keep track of friends in other countries. Now it's just a shit bucket of content I never asked for that I have to wade through trying to find some things actually posted by my friends.

Insta kept the old model longer but now it's also turning into a trashcan because they're copying tiktok. If i wanted TikTok i would have downloaded that.

I know it says "Facebook daily active users (DAUs)" but I'm not sure why it wouldn't include the "Family of apps", ie Facebook, Instagram, Messenger, WhatsApp, etc

Outside of Google search or Youtube, Meta's grip on the internet is unrivaled.

How is this sort of growth possible after multiple decades…

If you do the math, the stock price isn't even outrageously high. They are just making a shitload of money.

The stock jumped 15% after hours though.

Yes, but the P/E ratio is still about 20, which is slightly high but not outside the normal range.

Contrast that with on the news the other night they had a clip of Zuck at a Senate hearing addressing the parents behind him that all had lost a child to suicide from social media bullying. Also during the hearing he would quote about how there isn't conclusive causal with social media use in kids causing mental health issues.

$134 Billion in revenue in 2023. They can pay off anyone, legally via lobbying, and subvert any studies or content from gaining traction on their platforms that would hurt their bottom line.

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