(Bloomberg) — Shares of Meta Platforms Inc rose more than 20%, on track for its biggest gain in 10 years, after CEO Mark Zuckerberg announced plans to make the social media giant more agile, efficient and decisive.
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The stock rose in trading after New York markets closed on Wednesday. If gains hold, the move would be the biggest intraday jump since July 2013. Meta is the best performer in the S&P 500 since the stock’s November 3 closing low of $88.91, and has been poised to more than double in value since then.
Zuckerberg, who has spent the past year promising a distant future in a digital world called the metaverse, has been more focused on immediate issues, such as sending users the most relevant videos at the right time, and finally making significant revenue from messaging products. 2023 has been called the “Year of Efficiency.”
“We’re working to flatten our organization’s structure and remove some layers of middle management for faster decision-making, as well as deploy AI tools to help our engineers be more productive,” Zuckerberg said on an earnings call with investors. “There will be more we can do to improve our productivity, speed and cost structure.”
Zuckerberg said the company is using artificial intelligence to improve the way it recommends content — a strategy to make the platform more attractive to users and advertisers alike. Meta continues to experience declining demand for digital advertising, which makes up the vast majority of its sales, particularly from clients in finance and technology. But the company also pointed to some industries, including health and travel, where companies spend the most.
Fourth-quarter sales fell 4% to $32.2 billion, the third consecutive period of decline. However, the total exceeded analyst estimates, and Meta forecast revenue of $26 billion to $28.5 billion for the first quarter, in line with an average forecast of $27.3 billion. Analysts expect Meta to return to growth after the current period.
Snap Inc. gave , the parent company of rival social media app Snapchat, took a less optimistic outlook on Tuesday, sending its shares down 10%. Snap said it expects sales to decline in the current period, with CEO Evan Spiegel noting that the ad decline appears to be bottoming out. “Demand for advertising hasn’t really gotten better, but it hasn’t gotten significantly worse either,” Spiegel said on the conference call.
Read more: Snap CEO Spiegel says the digital ad slump is over
Meta, whose shares are up 27% so far this year, is on the rebound after its stock’s worst year in history. The company faced a decline in advertiser demand due to weakness in the broader economy as well as a change in privacy rules on Apple Inc.’s iPhone. , which made it difficult for Meta to serve targeted ads. Mita cut 11,000 jobs, or 13% of the workforce, in November in its first-ever major layoff.
Those reductions came during a quarter that was otherwise an improvement for the company. Facebook, the Meta’s main social network, now has more than 2 billion daily users, up more than 70 million from last year.
The company also boosted its stock repurchase authorization by $40 billion, on top of the remaining $10.9 billion from previous repurchase programs. In the fourth quarter, Meta posted a $4.2 billion restructuring fee related to job cuts.
Zuckerberg has spent tens of billions of dollars trying to build a metaverse – a digital world where people can work and play. These efforts are still in their infancy, which means that a lot of investment does not lead to immediate returns.
However, the Menlo Park, Calif., company said 2023 expenditures will be $89 billion to $95 billion — lower than Meta’s previous forecast. That could help ease investor concerns that the company is overspending on its VR ambitions.
Capital expenditures rose in the most recent quarter to $32 billion. In contrast, capital expenditure in the fourth quarter of 2021 was $5.54 billion.
– With assistance from Subrat Patnaik.
(Updates with moving post in second paragraph)
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