By
Bhushan Akolkar
April 25th, 2024
Meta shares continue to ascend in 2023 and are up 74% year-to-date, trading at $239, despite thousands of layoffs it plans to execute.
Meta Platforms (NASDAQ: META) shares have surged by a staggering 170% in the last 5 months despite experiencing almost no revenue growth. The multinational technology conglomerate’s shares are trading around $238.56 since November lows of $89. On Thursday, Meta’s shares popped 14% to a 52-week high on the sales increase and guidance reported in its Q1 2023 report. The company’s shares are also up 74% so far this year.
Meta Shares Recovery Continues after Three Straight Losing Quarters
The Meta shares upswing comes after three consecutive quarters of declining sales for the social media giant. While the company finally reported some revenue growth of 3% year-over-year, its cost-cutting efforts have drawn investors.
After years of uninhibited expansion, Meta decided to drastically cut down on costs to remain competitive and profitable. Since last November, the California-based corporation has embarked on mass layoffs and currently targets another 21,000 technical job cuts.
In February, Meta chief executive officer Mark Zuckerberg underscored the company’s cost-conscious disposition by declaring 2023 a “year of efficiency”. At the time, Zuckerberg said during Meta’s fourth-quarter earnings report:
“Our community continues to grow, and I’m pleased with the strong engagement across our apps. Our management theme for 2023 is the ‘Year of Efficiency,’ and we’re focused on becoming a stronger and more nimble organization.”
Shortly after Zuckerberg’s address to investors, Meta’s stock soared more than 20%.
However, despite the stock’s blistering start to 2023, META is still at a 37% drawdown from its September 2021 record high. The company’s stock slumped two-thirds last year in what was Meta’s most brutal stretch since its IPO ten years earlier.
AI
Meta’s prospects for the foreseeable future appear good primarily due to the company’s artificial intelligence (AI) commitments. After sustaining a loss in online advertising over the last few years, the company shifted its focus to generative AI.
Zuckerberg has pumped substantial sums of money into AI research and development, which has yet to max out profitability for Meta. In its latest quarterly report, Meta CFO Susan Li revealed that the company’s Reality Labs unit reaped $399 million in profit. However, this figure is relatively tame compared to the $3.99 billion Reality Labs sustained in operating losses.
Li suggested that Meta views its metaverse endeavors as a marathon, with further operating losses projected this year. However, the company remains optimistic about its AI work, with Zuckerberg explaining:
“Our AI work is driving good results across our apps and business. We’re also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long-term vision.”
Li also gave increased Q2 revenue guidance of between $29.5 billion and $32 billion compared to the $29.5 billion analysts expected. The Meta finance chief also anticipated full-year 2023 total expenses of between $86 and 90 billion, including $3-5 billion in restructuring costs.