Finance & Economics

Meta, Amazon Surge by $272 Billion

The e-commerce giant Amazon and one of the largest players in the global technological industry Meta have been focused over the past year on implementing measures aimed at reducing costs and reorienting their business.

Meta, Amazon Surge by $272 Billion

The mentioned set of solutions, which in a sense had a conceptual character, since it had a deep and fundamental impact on the strategy of activity, became something like what psychologists call getting out of the comfort zone for displaced technical workers in Silicon Valley and Seattle. However, the company’s moves, which determine the vector of their existence both on the external contour and within the corporate space, proved effective and brought results. In this case, the main beneficiaries were the investors of the technology giant and one of the largest players in the e-commerce sector.

On Thursday, Meta and Amazon released revenue data. These figures exceeded initial expectations. Against the background of the introduction of changed business strategies, including in the context of financial priorities, the cumulative growth in the value of the companies’ shares amounted to $272 billion in the premarket. The result is evidence that the concept, which can be described as a moderate economic approach, is appropriate. It is worth noting that the savings regime has become decisive for the technology sector over the past 16 months.

Meta’s revenue for the fourth quarter of last year was $40.1 billion. This indicator increased by 25% year-on-year. Experts predicted that the tech giant’s revenue for the mentioned period would amount to $39.18 billion.

Amazon’s revenue for the fourth quarter of 2023 was fixed at $170 billion. This figure for the same period in 2022 amounted to $149.2 billion. Analysts had predicted that the e-commerce giant’s revenue for the last quarter of 2023 would be $166.14 billion.

Last year, Meta reduced the number of employees by 22%. The tech giant also unveiled plans to buy back $50 billion worth of stocks. Moreover, the company has decided on the first quarterly dividend in its history. This action by the tech giant was a signal to investors about the availability of money to spare.

Amazon investors last year asked about any plans for the brand to return capital to shareholders. In this case, the company’s executives did not provide an unambiguous answer, using a kind of tactic of extensive formulations that do not convey clearly defined meanings. Since 2022, the e-commerce giant has launched the largest workforce reduction campaign in its history, which affected about 35,000 people last year. The company also announced that in 2024, more positions will be eliminated in its Prime Video units, studios, and Twitch livestreaming.

Gil Luria, managing director of D.A. Davidson & Co, says investors are pleased that technology brands with a penchant for financing moonshot products without projected payouts are reducing the volume of investments on profitable business lines. According to the expert, the new cost discipline demonstrates efficiency. In this case, investors will benefit from the fact that companies are reducing less productive units and at the same time retain the opportunity to finance segments of their business structures with a growth trend at the expense of the saved funds. Gil Luria says that brands adhering to the new cost discipline have been able to intensify the dynamic of the increase in revenue. Against this background, the margin showed significant growth.

Meta and Amazon reported an increase in their revenue in central units in the holiday quarter. In this case, it means the arm of a technology giant specializing in digital advertising, and the structural functional element of a virtual trading giant, whose activities are related to e-commerce sales.

Against the background of positive results, the growth of Meta shares during extended trading amounted to 15%. Amazon’s securities have risen in price by more than 7%.

Meta Chief Executive Mark Zuckerberg says that the current business results update the question of whether the tech giant should resume active investment. He also noted that the main barrier to a new period in the mentioned activity is the realization that the company works better by operating in the format of a more compact firm. At the same time, Mark Zuckerberg says that there are always thoughts about additional employees in one direction or another. Separately, Meta’s head stated that he appreciates more how more of an appreciation about how all of that adds up.

The media reports that Mark Zuckerberg will receive about $700 million a year from the first dividends in the history of the technology giant.

For years, Meta and Amazon have reinvested profits back into the companies. Against the background of these actions, the number of employees increased and new technologies and business lines were mastered. This strategy became increasingly apparent during the coronavirus pandemic when brands were actively spending money. In 2020, the number of Meta employees increased by 30%. A year later, this figure grew by another 23%. Also during this period, the company directed massive investments into augmented and virtual reality technologies. Mark Zuckerberg continues to demonstrate his commitment to the idea of creating a metaverse. This project is not yet what can be called a profitable direction, but the prospects of the brainchild in this case are more than large-scale.

Amazon has doubled the size of its logistics network in recent years. The e-commerce giant made the corresponding decision to meet consumer demand during the coronavirus pandemic. In 2022, the number of employees of the company increased by almost 30%. A year later, the e-commerce giant’s priorities have changed dramatically. Currently, the company does not demonstrate interest in hiring and does not demonstrate a desire to build new facilities in its functional network.

Against the background of the new concepts of Meta and Amazon, in which compactness is a kind of dominant ideologeme, the question arises about the ability of brands to implement bold and ambitious technological initiatives that allow them to remain in history as the leading force of global development.

The technology giant under the management of Mark Zuckerberg is currently actively investing in the evolution of the artificial intelligence industry. The company is focused on financing developments based on generative machine intelligence and so-called background technologies that help promote products on social media platforms and improve ad targeting.

Mark Zuckerberg is also interested in virtual and augmented reality headsets. The unit of the technology giant Reality Labs, which operates in the relevant sector, recorded losses of $16 billion last year. But this indicator does not mean that the project is hopeless, such efforts over time can demonstrate impressive results and be at the forefront of the material development of innovative ideas.

Mark Zuckerberg plans to keep hiring at a relatively minimal level in 2024 and beyond, despite his ambitious aspirations.

Amazon CEO Andy Jassy said that last year, the e-commerce giant reduced the cost of servicing a customer’s order by 45 cents per unit. This is the first decline in the specified index in five years. The head of the company promised to continue to look for ways to further reduce related costs.

Amazon CFO Brian Olsavsky said that the e-commerce giant will take a cautious approach in the context of new investment decisions. According to him, the company is interested in improving efficiency and doing more where possible.

As we have reported earlier, Meta Builds New AI-Focused Data Center in Indiana.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.