Home Tech Insides Meta Platforms Inc. (NASDAQ: META) Shares Up After Reports of Cost-Cutting and...

Meta Platforms Inc. (NASDAQ: META) Shares Up After Reports of Cost-Cutting and Ai Push

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Meta Platforms
Meta Platforms

Meta Platforms Inc. (NASDAQ: META) inches up in pre session on Friday as The Information reported on Thursday that the company had consolidated its advertising product, business messaging, and commerce units into one division, citing an internal communication from corporate CEO John Hegeman.

According to the article, the move is part of a larger attempt by the social media business to shrink the ranks of middle management across the corporation.

Meta did not immediately reply to a request for comment from Reuters.

The owner of Facebook and Instagram has also begun an ambitious cost-cutting push, with plans to remove 21,000 employees and flatten its middle-management structure in order to meet CEO Mark Zuckerberg’s aim of making 2023 the “year of efficiency.”

Meta Platforms Inc. is once again a Wall Street favourite. On Thursday, the company’s stock rose about 14% as investors hailed Meta’s focus on AI and cost-cutting, which has already helped the social media titan nearly quadruple in value by 2023.

If gains persist, Meta, whose stock was trading at a more than one-year high, is projected to add about $80 billion to its market capitalization and overtake Nvidia Corp as the best-performing firm in the S&P 500 index year to far.

The surge boosted other technology firms ranging from Snap Inc. and Pinterest Inc. to Amazon.com Inc. by up to 3.1%.

“You need growth if you want to be treated and valued like a growth stock!” And this is exactly what Meta achieved in terms of returning to growth… just as concerns about a future recession get louder,” Bernstein analyst Mark Shmulik wrote in a note.

Shmulik was one of 27 analysts who boosted their Meta price targets, increasing the consensus estimate to $270, or a roughly 13% increase in a company that is already leading gains among Big Tech firms this year.

Meta above estimates for first-quarter earnings and sales, which increased for the first time in over a year, the latest hint that American IT behemoths were digging themselves out of a recession that had resulted in tens of thousands of layoffs.

The findings also highlighted the growing relevance of AI, with CEO Mark Zuckerberg stating that the technology was assisting in increasing traffic to Facebook and Instagram and earning more in ad sales.

“We believe AI has played a critical role in shifting Meta from showing a more limited set of friends, family, and followed content to an almost unlimited set of recommended content now available in Reels and Feed,” analysts at J.P. Morgan said.

Zuckerberg also stated that the firm, which has undergone multiple costly overhauls to strengthen its core business, was no longer falling behind in terms of building up its AI infrastructure.

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