Meta Stock Climbs After Reports Of More Layoffs

Topline

Shares of Meta, the parent company of Facebook and Instagram, climbed nearly 1% Tuesday morning, following reports the social media giant plans to cut thousands of employees as soon as this week, even after it made one of the biggest rounds of layoffs in the tech industry earlier this year.

Meta’s stocks jumped nearly 1% Tuesday morning, following reports the company will implement another … [+] round of layoffs.

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Key Facts

Meta shares are up 60% year to date, reaching $186 Tuesday morning, in one of its biggest spikes in shares in recent months.

The boost in shares follows reports in multiple outlets that Meta is planning a new round of job cuts that could affect thousands of employees, according to sources familiar with the matter (Meta did not immediately respond to a Forbes inquiry for details on the cuts).

The company’s headcount reduction would mark its latest step to cut costs, following a major round of layoffs in November—CEO Mark Zuckerberg called 2023 the company’s “year of efficiency” in an earnings statement last month and said the company would “be more proactive” on “cutting projects that aren’t performing or may no longer be crucial.”

Surprising Fact

Recent tech layoffs have led to stock increases at multiple companies, including Google parent company Alphabet, as well as Spotify, Salesforce, Zoom and online furniture retailer Wayfair, as part of a phenomenon analysts believe will carry on throughout 2023. Wedbush analyst Daniel Ives told Forbes in January the layoffs constitute the “first major step” in stabilizing struggling stocks, after many tech companies hired ambitiously during the Covid-19 pandemic as consumers increasingly turned to online shopping and other online platforms. Although layoffs can signal a company is struggling, they can also be a positive sign to investors that a company is making moves to remain profitable.

Key Background

Following a wave of layoffs in the tech industry amid fears among employers that high inflation and multiple rounds of interest rate hikes could throw the economy into recession, Meta announced in November it would also be reducing its headcount, cutting roughly 11,000 employees and causing Meta’s stock to climb 5% on the day. At the time, Zuckerberg called it one of the “most difficult changes we’ve made in Meta’s history.” The only companies to implement bigger layoffs in recent months were Google parent company Alphabet, which announced plans in January to slash roughly 12,000 employees, and Amazon, which unveiled a plan to cut more than 18,000 positions. Last month, Meta’s stock had its best day in 10 years, surging 23% following a quarterly earnings report in which the company unveiled cost-cutting measures. The recent rise in stocks erased part of a 12-month slump following Zuckerberg’s decision in October 2021 to change the company’s name from Facebook to Meta in an effort to “reflect who we are and what we hope to build,” and as the company embarked on its Metaverse online augmented and virtual reality system. Meta’s stocks are still down more than 42% from October, 2021.

Contra

In February, a report in the Washington Post indicated Facebook was planning to cut thousands of jobs, and that the company was asking executives, lawyers and human resources officials to make a reorganization plan. Sources told the post the company was also planning to push some of its leaders into lower positions within the company. Meta spokesperson Andy Stone denied the report, writing in a Twitter message the Post “got this one wrong.” In a fourth fiscal quarter conference call last month, however, Zuckerberg admitted the company’s decision to cut roughly 11,000 employees was only “the beginning of our focus on efficiency and not the end.”

Meta Stock Climbs After Reports Of More Layoffs–Here’s Why

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Key Facts

Surprising Fact

Key Background

Contra

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