Meta’s Shares Surge 70%

By Douglas A. McIntyre Published Mar 17, 9:30AM EDT

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Meta’s Shares Surge 70% — © Chip Somodevilla / Getty Images

Meta Platforms Inc. (NASDAQ: META | META Price Prediction), the parent of Facebook, has been widely criticized for laying off 20,000 people. Founder and CEO Mark Zuckerberg has admitted he spent too many billions of dollars to move into businesses far flung from the advertising revenue Facebook produces. The layoffs have cheered inventors, no matter how brutal they are to the people involved. Meta’s shares are up 70% this year. By contrast, Amazon and Alphabet have done no better than the broader market. (Here are the industries laying off the most workers.)
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What has happened to create enthusiasm? First, Zuckerberg has created the impression that his margins can soar with fewer people and that, at the same time, he can roll back other expenses, mostly meant to develop new businesses.
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Meta had almost 85,000 employees before the cuts, which puts the downsizing of 20,000 in context. It takes the headcount down to where it was in 2020.

Wall Street’s deep disappointment with Meta changed some recently, although revenue fell 4% in the most recent quarter from the same period a year ago. This brought revenue down to $32.1 billion. Net income dropped sharply, from $10.3 billion to $4.6 billion. Just as challenging, daily active users, a critical yardstick, rose only 4% yearly to 2 billion.
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Facebook, once among the fastest-growing tech companies, is no longer growing. This lack of growth is compounded by the fact that the advertising market, which Facebook relies on, has been weak for the past several months. However, when Zuckerberg indicated future costs would drop sharply, investors saw a better future for the bottom line.
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Zuckerberg described 2023 as his “year of efficiency.” His AI-driven metaverse will no longer get the oxygen it needs for substantial growth. It will be starved because he made a mistake in throwing money into projects few people seemed to care about.

Meta is an ad-driven business. After a wrong turn, it is one again. The ad market may be weak, but when that turns around, Zuckerberg has fewer expenses so he can take advantage of that improvement.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.