Is it time to invest in ‘Meta’ as it vows to cut costs by 10%?

Meta Platforms Inc (NASDAQ: META) ended below its pandemic low on Wednesday even after the multinational revealed plans of cutting costs by at least 10% in the coming months.

What’s expected to drive these savings?

That bid to lower costs will include layoffs as well. Meta wants “affected” employees to apply for internal roles within a month. Failure to find one will lead to termination, as per the Wall Street Journal.

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Anonymous sources also signalled deeper cuts in future. Cutting overhead and consulting budgets, they added, will drive some savings as well.

Lowering expenses, Meta Platforms hopes, will help with the rising competition and slowing growth. In July, it reported its first-ever annualised decline in quarterly revenue as published here.

The tech titan ended its fiscal Q2 with 83,553 employees worldwide – up 32% YoY. Meta stock now has a price-to-earnings multiple of under twelve.

Expert dubs Meta stock a ‘value trap’

Nonetheless, the announcement wasn’t enough to win a bullish view from Bryn Talkington – Managing Partner at Requisite Capital.

On CNBC’s “Halftime Report”, she dubbed the stock a “value trap”.

This is textbook to me; growth name that’s become a value trap. It just continues to go lower. How can they continue to spend $10 billion for this metaverse yet reining in costs. I might do tax loss selling on this poor performer.

Meta stock might not be a suitable pick also because a recession is coming and it generates almost all of its revenue from “advertising” – one of the first expenditures that’s cut in an economic downturn.

It is currently trading well below its 200-day moving average.