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Even as brutal tech layoffs were fast becoming the norm last year, Meta’s announcement in November that it would cut 13% of its staff stood out. It remains one of the largest rounds of mass layoffs announced to date, and it was a sign that the parent company of Facebook, Instagram, and WhatsApp was determined to slam on the brakes after years of pandemic-era acceleration.
Three months later, the social media giant appears to be sticking to that strategy, with CEO Mark Zuckerberg declaring 2023 the “year of efficiency” on Wednesday as Meta released its fourth-quarter financial results.
The results themselves were not especially stellar—profits and revenue were both lower when compared to a year ago—but they were better than what Wall Street had expected, and shares of the company immediately popped.
Meta stock opened 20% higher on Thursday, making this one of its best days in a very long time.
As a business leader, Zuckerberg is not always known for his consistency or clear-mindedness, but analysts say his newfound focus on cost-cutting and efficiency looks to be the real deal.
“Mr. Zuckerberg is a capitalist after all,” analysts at MoffettNathanson said in a research note on Thursday. “He cares about the bottom line. He cares about shareholder value. He cares about how the market perceives his company.”
They added: “While we all know how rarely New Year’s resolutions graduate into reality, the CEO of a highly scrutinized publicly traded company like Meta cannot make such a proclamation without a real commitment to actualization.”
In the note, MoffettNathanson maintained its rating of Outperform and raised its price target for Meta stock to $255, up $35.
Meanwhile, analysts at Rosenblatt and Bank of America both upgraded the stock on Thursday, with the latter saying “the company’s new efficiency mentality positions stock for more than 40% upside,” according to CNBC.
It’s a huge difference from a year ago, when Zuckerberg’s obsessive focus on transitioning to the metaverse had Wall Street wondering if he was willing to chuck the entire playbook to get there. In November, Meta was said to be the worst performing stock in the entire S&P 500.
Newfound efficiency or no, the larger questions of what kind of company Meta will be a year from now are far from answered. It’s still facing the same problems, including a challenging ad market, privacy features from Apple, and encroaching competition from TikTok. And Reality Labs, the division tasked with turning its VR ambitions into reality, lost almost $14 billion last year.
Still, Wall Street has never met a cost-savings plan it didn’t like. And a little consistency and clear-mindedness from the top seems to go a long way. Facebook’s embattled parent, in other words, could be the comeback story of 2023.
“This stock has been beaten up because investors felt betrayed by leadership and, in their anger, forgot what attracted them to the stock in the first place,” MoffettNathanson wrote. “Meta’s core business is a relatively good business.”
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