Shares of Meta Platforms Inc rose nearly 23% on Thursday and fueled a rally in the technology sector after the Facebook owner soared Wall Street by slashing his spending forecast and raising his stock buyback plan to $40 billion. Giving helped.
The company was poised to add more than $90 billion to its market value and was certainly on course to enter its best day in a decade. The rally also lifted shares of Amazon.com, Apple and Alphabet, all of which have valuations of more than $1 trillion and will report earnings after the market close.
Meta’s move to rein in costs on Wednesday marked a dramatic turnaround for a company that has spent billions of dollars to turn its vision of the metaverse of the future into a reality, even as its core business faces stiff competition and Recovered from weak advertising market.
At least 24 analysts raised their price targets on the stock after the results, with many saying that a combination of lower costs, upbeat revenue growth and share buybacks will boost Meta’s earnings per share.
Noting the positive development, analysts at Evercourse ISI said, “It’s rare.” “And stocks rarely react.”
The results brought some relief to the market after Snap Inc.’s earnings decline on Tuesday sent tech stocks lower.
“After the Snap disaster, the fact that the meta wasn’t so bad gave tech mega-caps an incentive,” said City Index analyst Fiona Cincotta.
“There’s also a less hawkish Fed (Federal Reserve), which is driving up demand for growth and tech stocks in general.”
‘Year of Efficiency’
Meta now expects its 2023 spending to be between $89 billion and $95 billion, a sharp decline from its previous outlook of $94 billion to $100 billion, with CEO Mark Zuckerberg calling the period “the year of efficiency”.
The forecast reflects savings from 11,000 job cuts announced in November, plans to lower data-center construction spending and steps to shed non-critical projects.
“Promising that 2023 will be the year of efficiency was always a good prospect with investors concerned about leniency in spending directed toward the unproven potential of the metaverse,” said Russ Mould, investment director at AJ Bell.
There were also signs that Meta’s core social-media business was getting back on track, with monetization efficiency doubling for short-form video reels on Facebook and the business on track to break-even by the end of 2023.
The company, which reported first-quarter revenue ahead of market estimates, also said Facebook’s daily active user base grew to 2 billion from 1.98 billion in the previous quarter.
“Meta is getting its mojo back,” said Baird analysts.
The company was poised to add more than $90 billion to its market value and was certainly on course to enter its best day in a decade. The rally also lifted shares of Amazon.com, Apple and Alphabet, all of which have valuations of more than $1 trillion and will report earnings after the market close.
Meta’s move to rein in costs on Wednesday marked a dramatic turnaround for a company that has spent billions of dollars to turn its vision of the metaverse of the future into a reality, even as its core business faces stiff competition and Recovered from weak advertising market.
At least 24 analysts raised their price targets on the stock after the results, with many saying that a combination of lower costs, upbeat revenue growth and share buybacks will boost Meta’s earnings per share.
Noting the positive development, analysts at Evercourse ISI said, “It’s rare.” “And stocks rarely react.”
The results brought some relief to the market after Snap Inc.’s earnings decline on Tuesday sent tech stocks lower.
“After the Snap disaster, the fact that the meta wasn’t so bad gave tech mega-caps an incentive,” said City Index analyst Fiona Cincotta.
“There’s also a less hawkish Fed (Federal Reserve), which is driving up demand for growth and tech stocks in general.”
‘Year of Efficiency’
Meta now expects its 2023 spending to be between $89 billion and $95 billion, a sharp decline from its previous outlook of $94 billion to $100 billion, with CEO Mark Zuckerberg calling the period “the year of efficiency”.
The forecast reflects savings from 11,000 job cuts announced in November, plans to lower data-center construction spending and steps to shed non-critical projects.
“Promising that 2023 will be the year of efficiency was always a good prospect with investors concerned about leniency in spending directed toward the unproven potential of the metaverse,” said Russ Mould, investment director at AJ Bell.
There were also signs that Meta’s core social-media business was getting back on track, with monetization efficiency doubling for short-form video reels on Facebook and the business on track to break-even by the end of 2023.
The company, which reported first-quarter revenue ahead of market estimates, also said Facebook’s daily active user base grew to 2 billion from 1.98 billion in the previous quarter.
“Meta is getting its mojo back,” said Baird analysts.