Meta stock surges 20% after Zuckerberg hints at more layoffs; stock doubled in just 3 months from $89 to $180
Shares of Meta soared on Thursday by more than 20 percent after the social media giant reported better-than-expected fourth-quarter revenue of $32.17 billion. Analysts were expecting revenue of $31.53 billion, according to Refinitiv. The social giant was rewarded by investors as Meta stocks surged to $180.41 as the market opened, making it one of its best days ever.
The latest stock surge is not so much about Meta beating market expectations. It has more to do with another round of layoffs. During the earnings call, Meta CEO Mark Zuckerberg said the social-media giant will make 2023 the “year of efficiency” — and hinted that more layoffs could be in the offing. Wall Street also reacted positively to news that Meta would initiate a new round of share buybacks.
Following the good earnings news, Meta announced a $40 billion stock buyback. This is not the first time Meta has done a stock buyback. In 2021, Meta spent $45 billion on stock buybacks at $330 a share. The company still has a long way to recoup its loss even at the current stock price of $180.
On November 9, Facebook’s Meta laid off 13% of its total workforce, or more than 11,000 employees after losing $700 billion of its value over a risky metaverse bet.
Meta said the affected employees will receive 16 weeks of pay plus two additional weeks for every year of service, Zuckerberg said. Meta will cover health insurance for six months. Zuckerberg also said the company spent around $3.7 billion in 2022 in paying out severance as well as terminating office leases.
“We closed last year with some difficult layoffs and when we did this, I said clearly that this was the beginning of our focus on efficiency and not the end,” Zuckerberg said. adding that further layers of middle management could still be trimmed.
In October 2021, Mark Zuckerberg announced he was changing the name of the company he founded about two decades ago from Facebook to Meta to reflect its focus on the metaverse. During the speech, Zuckerberg described the metaverse as “an embodied internet where you’re in the experience, not just looking at it. We call this the metaverse, and it will touch every product we build.”
Since the rebrand, Meta has lost more than 70% of its value since peaking last year as all its business units continue to get pummeled on multiple fronts. The social giant has lost 70% of its value YTD as its stock falls from $300 to just $100.
But Meta believes the metaverse is a game-changing technology and believes the early mover advantage will potentially make Meta the first multi-trillion dollar company. While its stocks cratered, Zuckerberg doubled down on losing even more money building the metaverse.
Meta also said it plans to invest $10 billion in the metaverse to reflect the company’s new vision. At the time, Meta said it plans to hire 10,000 people in the European Union to build a “metaverse.” Zuckerberg added that the metaverse is a major investment for the company and plays a vital role in the company going forward.