Meta shares up after Mark Zuckerberg makes ‘efficiency’ promise

Meta CEO Mark Zuckerberg said he is removing layers of middle management in order to make decisions faster. Photo: Abdulhamid Hosbas/Anadolu Agency via Getty Images

Kurt Wagner

February 03 2023 02:30 AM

Meta Platforms' shares soared 19pc as trading got underway in New York on Thursday after CEO Mark Zuckerberg announced plans to make the social media giant leaner, more efficient and more decisive.

If the gains hold, Meta will record the biggest intraday jump since at least April and will have more than doubled its market value to about $472bn (€433bn) since a November 3 low.

Mr Zuckerberg, who has spent the past year promising a faraway future in a digital world called the metaverse, was more focused on immediate problems, such as sending users the most relevant videos at the right time, and finally making significant revenue from messaging products. He called 2023 the ‘Year of Efficiency’.

"We're working on flattening our org structure and removing some layers of middle management to make decisions faster, as well as deploying AI tools to help our engineers be more productive," Mr Zuckerberg said on an earnings call with investors on Wednesday.

"There's going to be some more that we can do to improve our productivity, speed and cost structure."

Mr Zuckerberg said the company is using AI to improve the way it recommends content – a strategy for making the platform more attractive to users and advertisers alike. Meta is still suffering from a slump in demand for digital ads, which make up the vast majority of its sales, especially from clients in finance and technology.

But the company also pointed to some industries, including health and travel, where businesses are spending more.

Fourth-quarter sales fell 4pc to $32.2bn, the third straight period of declines. Even so, the total beat analysts' estimates, and Meta projected revenue of $26bn to $28.5bn for the first quarter, in line with an average projection of $27.3bn.

Analysts are predicting that Meta will return to growth following the current period.

Snap, the parent of rival social-media app Snapchat, gave a less upbeat outlook on Tuesday, sending its shares down 10pc.

Snap said it expected sales to decline in the current period, with CEO Evan Spiegel remarking that the ad slump appears to be bottoming out.

"Advertising demand hasn't really improved, but it hasn't gotten significantly worse either," Mr Spiegel said on a conference call.

Meta, whose shares have gained 27pc so far this year, is on the rebound after the worst year for its stock 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's iPhone, which made it harder for Meta to offer targeted ads.

Meta cut 11,000 jobs in November in its first ever major layoff.