Meta Platforms (Nasdaq: META) last week announced that they would be laying off 11,000 employees or about 13% of the team, and are extending a hiring freeze through the first quarter. Mark Zuckerberg, Meta’s CEO, says that this is part of a plan to “become a leaner and more efficient company by cutting discretionary spending.”
Zuckerberg goes on to say that with this firing, they are also going to be looking at major restructuring of their internal business teams while they are looking for other ways to cut costs. They have cut costs already by shrinking their real estate footprint, as well as introducing desk sharing.
As a result, most of Meta’s outlook has stayed the same outside of the company’s full-year 2023 capital expenditures, which are now slated to be between $34 and $37 billion versus the previous estimate of $34 and $39 billion. Also, the company’s full-year 2023 expense budget is now expected to be between $94 and $100 billion, down from $96 and $101 billion. They continue to anticipate revenues for the fourth quarter to be between $30 and $32.5 billion
Meta Platforms currently has 58 analysts covering the stock with an average 12-month price target of US$154.89, or an upside of about 40%. Out of the 58 analysts, 14 have strong buy ratings, 20 have buy ratings, another 20 have hold ratings, three analysts have sell ratings, and a single analyst has a strong sell rating on the stock.
In Canaccord Capital Markets’ note on the news, they reiterate their buy rating on the stock. Still, they slash their 12-month price target down to US$170 from US$200, saying that the news was welcomed but they have cut their price target due to the current multiple compression in the technology sector.
They have also updated their model to include management-updated estimates and say, “We view this announcement as incrementally positive for the stock.”
Specifically pointing toward the uncertain macro backdrop and slowdown in digital advertising, they write, “these reductions should help to better align Meta’s cost structure with its current growth trajectory, appeal to current investor sentiment, and enhance overall operating efficiency.”
Information for this briefing was found via Edgar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
