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Meta surges on cost cut, buyback plans; lifts mega-cap stocks
Global Banking & Finance Review®
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(Reuters) – Shares of Meta Platforms Inc soared nearly 20% in premarket trading on Thursday as the Facebook parent wooed investors with plans to rein on costs and a new $40 billion share buyback.
(Reuters) – Shares of Meta Platforms Inc soared nearly 20% in premarket trading on Thursday as the Facebook parent wooed investors with plans to rein on costs and a new $40 billion share buyback.
Meta plans to cut costs in 2023 by $5 billion to between $89 billion and $95 billion compared with its earlier outlook of $94 billion to $100 billion, with CEO Mark Zuckerberg calling 2023 the “Year of Efficiency.”
The company further boosted investot confidence by forecasting first-quarter sales ahead of Wall Street estimates.
If premarket gains hold, the company would add nearly $76 billion to its $401.51 billion market value. The stock slumped about 64% in 2022.
“Promising that 2023 will be a year of efficiency was always likely to go down well with investors concerned about the largesse in spending directed towards the unproven potential of the metaverse,” said AJ Bell, investment director at Russ Mould.
Meta results also sparked a rally in shares of other mega-cap firms that are set to report quarterly results later in the day. Amazon.com Inc and Google owner Alphabet Inc rose about 4% each, while Apple Inc firmed 1.1%.
Shares of social media firm Pinterest Inc added about 5.8% after a report that the online pinboards firm was cutting staff by 150, nearly 5% of its workforce, while Snap Inc added 2% a day after ending nearly 10% lower after the company forecast a decline on current-quarter revenue.
Rate-sensitive tech and growth stocks also got a boost as U.S. Treasury yields retreated after Federal Reserve chair Jerome Powell acknowledged on Wednesday that inflation was starting to ease.
(Reporting by Medha Singh in Bengaluru; Editing by Vinay Dwivedi)
A share buyback is when a company purchases its own shares from the marketplace, reducing the number of outstanding shares. This can increase the value of remaining shares and is often seen as a sign of confidence in the company's future.
Market value refers to the total worth of a company's outstanding shares in the stock market, calculated by multiplying the share price by the total number of shares. It reflects the company's current valuation by investors.
A cost-cutting strategy involves reducing expenses to improve profitability. Companies may implement measures such as layoffs, reducing operational costs, or streamlining processes to achieve financial efficiency.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to keep the economy running smoothly.
Mega-cap stocks are shares of companies with a market capitalization of over $200 billion. These companies are typically leaders in their industries and are considered stable investments.
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