Facebook Meta shares rise 7% as Wall Street rally around layoffs

Meta shares jumped on Wednesday after the company announced it would lay off more than 11,000 employees.
In a letter to employees, CEO Mark Zuckerberg said he’s sharing “some of the most difficult changes we’ve made in Meta’s history.”

shares of meta
It jumped more than 7% on Wednesday after the company announced it would lay off more than 11,000 employees.

UBS. analyst of
On Wednesday, Meta was encouraged by the announcement and said it believes the layoffs are a clear sign that the company “gets it.” Analysts reiterated their buy ratings on Meta shares, saying they liked Zuckerberg’s comment about becoming “more capital efficient” in his employee memo.

“We think the meta cost cuts – in OPEX and CAPEX – are signs that the company is listening to investors, and we think the shares could move higher,” he wrote in Wednesday’s note.

Investors are concerned about rising costs and expenses for Meta, which grew 19% year over year to $22.1 billion in the third quarter. The company provided lukewarm guidance for its upcoming fourth-quarter earnings in late October that spooked investors and caused its shares to drop nearly 20%.

Meta’s share price is down more than 71 percent so far this year, and the company became the worst-performing company in the S&P 500 last week.

Analysts at RBC Capital Markets said the layoffs do not address many of the challenges facing Meta, but “management’s first olive branch is at least a start.”

He maintained his outperform rating on Meta.

“While this announcement does nothing to reduce competition, signal loss and the perception of excessive Metaverse investing – it is the first sign that the CEO has acknowledged the desire of shareholders to invest a little more prudently. business faces,” RBC analysts wrote in a note on Wednesday.

Analysts at JPMorgan said they viewed the cut in Meta’s headcount favorably and that the layoffs could theoretically remove about $8 billion in costs for the company on an annual basis.

“While we expected the 2023 spending outlook to decrease further, the overall workforce reduction is likely higher than most people expected and indicates that management is acting with increased discipline, particularly with regard to income.” In case 3Q.” After a difficult period of almost 2 weeks since reporting.”

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