Meta Platforms, the parent company of Facebook, saw its stock rise as much as 19% on Thursday after the company reported that its main platform added more users than expected in the first quarter, assuaging concerns that the company is losing steam as a new generation flock to younger sites like TikTok.
Meta announced on Wednesday that its primary platform has 1.96 billion daily users, a return to growth following the first-ever fall in the December quarter. Analysts had predicted a total of $1.94 billion.
Revenue increased 6.6 percent to $27.9 billion, the smallest growth in a decade, and would have been higher if not for the conflict in Ukraine, according to the company.
Investors became increasingly concerned that Meta’s core business and profit engine, advertising in its social media feeds, was losing steam, and the stock had plummeted nearly 50% this year.
Those fears appear to have been allayed — at least for the time being — since Facebook just added 31 million new daily active users. Many of Meta’s problems still exist. Mark Zuckerberg, Facebook’s CEO, has admitted that TikTok, a video-sharing app, is a significant competitor for young users’ attention.
The stock soared to a high of $208.20 per share, the most intraday gain since July 2013.
A sustained decline would make it more difficult for the company to justify Zuckerberg’s costly, virtual-reality-fueled metaverse vision, a business that won’t turn a profit for years, if ever.
On a conference call with analysts on Wednesday, Zuckerberg repeated that Meta’s Reality Labs section, which is developing AR and VR technology, will not contribute significantly to the company’s business for several years. Meanwhile, Facebook has announced that it will invest billions of dollars and hire thousands of people to turn the platform, which Zuckerberg sees as the next major computing shift, into a fully immersive digital environment where users will interact virtually while working, shopping, and playing games.