(Bloomberg) – Meta Platforms Inc. is heading for its biggest one-day gain in nearly a decade after CEO Mark Zuckerberg outlined plans to make the social media giant leaner, more efficient and more decisive.
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Zuckerberg, who has spent the last year promising a distant future in a digital world called the Metaverse, focused more in a call with investors Wednesday on immediate issues, like sending users the most relevant videos. at the right time, and finally make revenue from courier products. He called 2023 “the year of efficiency”.
“We are working on flattening our organizational structure and removing some layers of middle management to make decisions faster, as well as deploying AI tools to help our engineers be more productive,” Zuckerberg said during the call. “We will be able to do even more to improve our productivity, our speed and our cost structure.”
Meta, rebounding from the worst year ever for its stock, stands in stark contrast to other tech companies that have seen their stocks punished for disappointing prospects. Snapchat owner Snap Inc., for example, plunged 10% after projecting its first-ever quarterly revenue drop. The industry has faced a drop in demand from advertisers, as well as a change in privacy policies on Apple Inc.’s iPhone, making it more difficult to offer targeted ads. But Meta countered the crisis with measures that included cutting 11,000 jobs, or 13% of the workforce, in November in its first-ever major layoff.
The surge in the company’s shares was the main contributor to the Nasdaq 100 rally on Thursday, adding more than 10% to the rise in the benchmark, according to data compiled by Bloomberg. The tech-heavy gauge is edging closer to a bull market as investors pile into growth stocks, betting that the Federal Reserve’s rate hike cycle is coming to an end.
Meta shares jumped 24% to $189.54 at 10:41 a.m. in New York.
During the call with investors on Wednesday, Zuckerberg said the company is using AI to improve the way it recommends content — a strategy to make the platform more engaging for users and advertisers. Digital ads make up the vast majority of its sales, especially to finance and technology clients. And while ad sales have fallen, the company also pointed to certain sectors, including health and travel, where companies are spending more.
Fourth-quarter sales fell 4% to $32.2 billion, the third consecutive period of decline. Even so, the total beat analysts’ estimates and Meta was forecasting revenue of $26 billion to $28.5 billion for the first quarter, in line with an average projection of $27.3 billion. Analysts predict that Meta will return to growth after the current period.
Snap gave a less optimistic outlook on Tuesday, saying it expected sales to decline in the current period. CEO Evan Spiegel said the decline in advertising appears to be bottoming out. “Ad demand hasn’t really improved, but it hasn’t gotten significantly worse either,” Spiegel said on a conference call.
Read more: Snap CEO Spiegel Says Digital Advertising Slump Has Leveled Off
Meta’s job cuts came in a quarter that was otherwise an improvement for the company. Facebook, Meta’s flagship social network, now has more than 2 billion daily users, up more than 70 million from a year ago.
The company also increased its share buyback authorization by $40 billion, adding to the remaining $10.9 billion from previous buyback programs. In the fourth quarter, Meta recorded restructuring charges of $4.2 billion related to its job cuts.
Zuckerberg has spent tens of billions of dollars in an effort to build the metaverse – a digital world where people can work and play. These efforts are still in their early stages, which means that much of the investment is not generating immediate returns.
Still, the Menlo Park, Calif.-based company said 2023 spending would be $89 billion to $95 billion, lower than Meta’s previous forecast. That could help ease investor concerns that the company is spending too much on its VR ambitions.
Capital spending in the last quarter jumped to $32 billion. In the fourth quarter of 2021, on the other hand, capital expenditure was $5.54 billion.
–With help from Subrat Patnaik and Divya Balji.
(Add Nasdaq 100 rally to fifth paragraph)
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