(New: peak plus of 28 percent, Bofa upgrade, closing price)
NEW YORK (dpa-AFX Broker) – The increased confidence in the future business development after good figures, further share buybacks and cost reductions gave Meta (Meta Platforms (ex Facebook)) a historic price jump on Thursday. Right at the start of trading, the shares of the parent company of Facebook, Instagram and WhatsApp overcame their interim highs from the summer above the $180 mark and only peaked at close to $200.
After a peak plus that was over the 28 percent mark, they finally defended a price jump of 23.3 percent to $ 188.77. This was enough for the biggest daily gain in almost years. With this, they were among the defining values for the fact that the euphoria on the technology-heavy Nasdaq stock exchange, which had been driven by the US Federal Reserve the previous day, endured. The leading index Nasdaq 100 (NASDAQ Composite Index) gained 3.6 percent there.
In absolute terms, Meta’s stock market value rose by just over $90 billion to $489 billion. The price increase this year was increased to almost 57 percent in one fell swoop – a remarkable value for a still young stock market year 2023. During this period, Meta is also one of the leading groups in the technology-heavy selection index, which has risen by 17 percent so far.
Bank of America took the moment to freshly recommend the stock as a buy. According to analyst Justin Post, Meta is starting an important transition process with a focus on more efficiency. It seems as if the social media group has found its right medicine, analyst Benjamin Black from Deutsche Bank also commented positively on the developments.
Several analysts, including the experts from Bank of America and Deutsche Bank, also raised their price targets for the share significantly. The majority are now above the $200 mark, giving the shares further upside. The investment recommendations remained correspondingly positive. However, there is still a long way to go before the record high of a good $384 from September 2021.
Brent Thill from the investment house Jefferies sees plenty of reasons to be optimistic for the new year in the business figures for 2022. In a weak market environment, Meta performed strongly in terms of sales in the final quarter, and growth did not slow down after adjusting for currency effects, the expert explained. In addition, the return on Meta advertisers’ spend on the company’s platforms appears to be improving. Meta’s share of the companies’ advertising budgets is therefore likely to grow.
Group sales fell by four percent year-on-year in the past quarter. However, somewhat lower proceeds were expected on the market. At the same time, there were signs of recovery in advertisements from the travel industry and the health sector, it said. The number of users continues to grow. Facebook now has two billion daily active users – an increase of 16 million within three months. At least one Meta app was last used by 2.96 billion users per day, up from 2.93 billion three months earlier.
2023 should now be a “year of efficiency” for the group, said founder and boss Mark Zuckerberg. The focus is on being “stronger and more agile”. Meta will remove layers in middle management so decisions can be made faster. Projects that do not bring the desired results should be stopped more quickly.
Meta had already announced that around 11,000 jobs would be cut last fall. The company booked restructuring costs of $4.2 billion for the quarter. In 2023, spending is also expected to be lower than previously estimated, partly due to lower investments in data centers.
The share’s downward slide, which lasted around a year, began after the record high in September 2021. She had come under severe pressure after a former employee made internal documents public. She acted as a whistleblower and accused Facebook of putting profits before the well-being of its users. Later in 2021, after a wave of negative headlines surrounding Facebook, Instagram and WhatsApp, the name was changed to Meta.
However, the attempted image change to step out of the shadow of the social network Facebook did not help. In 2022, the share price continued to fall in the wake of a tech crisis on Wall Street. The share prices of many previously hyped companies collapsed, also because interest rates rose sharply around the world. The tech-heavy NASDAQ 100 fell about a third, and Meta lost nearly two-thirds of its value.
Meta was also hit by the slowdown in the online advertising market. At the end of October, the fear of a significant business slump spread among investors: the slide in the papers accelerated according to the figures for the third quarter – in just one day the price collapsed by a quarter, the stock market value fell around 70 billion dollars. The paper was listed below the $100 mark for the first time since 2016. The price slide only ended at the beginning of November at a good 88 dollars. Since then, it has gone up bit by bit – most recently up to around $153 and, according to the numbers, back towards $200.
Despite Meta’s new frugality, Zuckerberg is pushing the controversial development of digital worlds under the catchphrase “Metaverse” for big bucks. The Reality Labs division, which bundles the virtual reality business, posted an operating loss of around $4.3 billion in the past quarter. This also includes restructuring costs, said CFO Susan Li. For the whole of 2022, the operating minus added up to $ 13.7 billion – with sales of only $ 2.16 billion. Li also reiterated earlier forecasts that Reality Labs’ loss will be even larger this year.
Overall, however, management is now taking a more balanced approach to investments, said analyst Eric Sheridan of investment bank Goldman Sachs. Investors are beginning to better understand how past and current investments could drive future sales. Therefore, shares should continue to recover, Sheridan believes./mis/so/ag/jha/gl/tih
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