The company was set to add around $75 billion to its market value and would post its best day in a decade, if gains hold.
Meta stock surge also sparked a rally in shares of mega-caps Amazon.com, Apple Inc and Alphabet Inc, all of which sport market values of more than $1 trillion and report earnings after market close.
Meta’s move on Wednesday to rein in costs was a dramatic shift for a company that has spent billions of dollars to turn its vision of the futuristic metaverse into a reality even while its core business reeled from stiff competition and a weak advertising market.
The results prompted at least 19 analysts to boost their price targets on the stock, with several saying that a combination of lower costs, upbeat revenue growth and share buybacks will drive up earnings per share.
“That is rare”, analysts at Evercorse ISI said, referring to the positive developments. “And stocks react to rare.”
Discover the stories of your interest
The results also provided some relief to the market after an earnings meltdown at Snap Inc on Tuesday that had sent the tech sector’s shares lower. “After Snap’s disaster, the fact that Meta wasn’t quite so bad has brought encouragement to tech mega-caps,” said Fiona Cincotta, analyst at City Index.
“There is also a less hawkish Fed which is also boosting demand for growth and tech stocks generally.”
Meta now expects its 2023 expenses between $89 billion and $95 billion, a sharp drop from its previous outlook of $94 billion to $100 billion, with CEO Mark Zuckerberg calling the period a “Year of Efficiency.”
The forecast reflects savings from the 11,000 job cuts it announced in November, plans for lower data-center construction expenses and moves to drop non-crucial projects.
“Promising that 2023 will be a year of efficiency was always likely to go down well with investors concerned about the largesse in spending directed towards the unproven potential of the metaverse,” said AJ Bell, investment director at Russ Mould.
There were also signs that Meta’s core social-media business was getting back on track, with monetization efficiency for short-form video Reels on Facebook doubling and the business being on track to break-even as soon as end of 2023.
The company, which forecast first-quarter revenue above market estimates, also said that Facebook’s daily active user base grew to 2 billion, from 1.98 billion in the prior quarter.
“Meta is getting its mojo back,” analysts at Baird said.
For all the latest Technology News Click Here
