Facebook-Parent Meta Increases Share Repurchase Authorization by $40 bn

Facebook’s parent company Meta announced on Wednesday that it has increased its share repurchase authorization by $40 billion. Credit: Anthony Quintano / Wikimedia Commons CC BY 2.0

The parent company of Facebook, Meta Platforms, has announced that it has increased its share purchase authorization by $40 billion. According to the company’s quarterly earnings statement, its net income has fallen but revenues exceeded forecasts by analysts.

The social networking giant is seeking to limit costs amid an increasingly uncertain economic environment and a slowing rate of growth. Some economic experts have identified recent contractions in the tech industry as some of the worst in its history.

Meta began buying back shares in 2017 but significantly accelerated this process in 2021, as growth from the Covid pandemic helped to drive up income. With lockdown restrictions lifted in most places, and people being less dependent on technology and social interactions, tech sector profits are expected to recede.

Meta publicizes $40 billion stock buyback

On Wednesday, Meta announced that it has upped its share repurchase authorization by $40 billion. The announcement was made in the tech giant’s quarterly earnings statement, which indicated that Meta had exceeded earlier estimates for revenue, despite an uncertain economic environment.

In 2022, the social media company led and founded by Mark Zuckerberg, bought back approximately $28 billion in stock, the quarterly earnings statement also said.

Meta began re-purchasing stocks in 2017 but increased quarterly buybacks higher than $10 billion for the first time in 2021. Growth from the Covid pandemic, which positively impacted the bottom lines of most big tech companies, helped to fund this buy-back effort.

Financial performance and structure

In January, business analyst Allyn made an assessment that the tech “industry is confronting one of its worst contractions in history “. Although the use of technology continues to proliferate in business, social life, the media, and many other areas, the tech industry is facing a period of uncertainty following a record-high performance during the pandemic.

Meta and Facebook have certainly been affected by wider economic trends impacting the tech industry. In November last year, the tech giant announced that it would be making 11,000 employees redundant.

At the time, Zuckerberg’s overoptimism concerning future growth and expansion was listed in The Wall Street Journal as one of his more serious mistakes. This is an error that eventually led to a significant overstaffing problem.

Zuckerberg said that the layoffs, which led to a reduction of staff by 13 percent, were necessary for Meta to “become a leaner and more efficient company.”

At the end of 2022, Meta’s net income fell by 55 percent to $4.65 billion. However, the company had $41 billion in cash, cash equivalents, and marketable securities. Despite the economic gloom, the tech giant’s fourth-quarter results did surpass analysts’ revenue estimates, which helped lead to an increase in share prices by 17 percent.