Meta Platforms is the IBD Stock Of The Day as the beleaguered social media giant aims to make 2023 a "year of efficiency." Meta stock is holding up well in a weak and volatile market.
Meta, like all social media companies, is struggling due to a sharp reduction in advertising. In addition, companies are squirming over macroeconomic concerns, fears of a recession and higher interest rates. This is happening as Facebook is spending billions on a risky bet to build the "metaverse," a virtual reality world that has yet to take hold.
In November, Meta cut 11,000 employees, or 13% of its workforce. Meta stock is up 20% since then.
A report from Bloomberg this past week said Meta expects to cut "thousands" more, though it did not give a specific number.
Now, Meta stock is on track to create a flat base. That base is one of the few reliable chart patterns that quality stocks form before they make substantial price advances. The new buy point is 197.26.
In addition, a move above the high of 190.36 set on Tuesday could provide an early entry.
Meta Stock Action Today
On the stock market today, Meta stock dropped 1.2% to close at 179.51.
The company is not alone among major technology companies to announce cutbacks.
Other tech giants — such as Amazon, Google parent Alphabet, Microsoft and Salesforce — also have announced a large number of layoffs.
Meta reported fourth-quarter results on Feb. 1 that missed estimates, but it announced a $40 billion share buyback. Last year, Meta spent $27.9 billion on share repurchases.
Meta Shares Surge On Efficiency Theme
Chief Executive Mark Zuckerberg, in a statement with the earnings report said, "Our management theme for 2023 is the 'Year of Efficiency' and we're focused on becoming a stronger and more nimble organization."
In reaction to the earnings report, Meta stock surged 18.5%.
Like other social media companies, including Snapchat parent Snap, Etsy and Pinterest, Meta is challenged not only by macroeconomic weakness but by a painful drop in digital advertising.
Meta lost roughly $10 billion in ad revenue last year after Apple changed privacy policies for the iPhone. That change made it more difficult to accurately target users with ads.
But Meta has made technology improvements with its new ad strategy.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
