Meta mojo is back as earnings surprise powers Big Tech rally
Meta Platforms Inc shares rose about 28% on Thursday and helped spark a rally in the technology sector after the Facebook owner floored Wall Street by slashing its spending forecast and boosting its stock buyback plan by $40 billion.
The company was set to add more than $110 billion to its market value and was on course to log its best day in a decade. The surge also lifted shares of Amazon. com, Apple and Alphabet, all of which sport valuations of more than $1 trillion and will report earnings after market close.
Meta's move on Wednesday to rein in costs marked a dramatic shift for a company that has spent billions of dollars to turn its vision of the futuristic metaverse into a reality, even while its core business reeled from stiff competition and a weak advertising market.
At least 24 analysts boosted their price targets on the stock after the results, with several saying that a combination of lower costs, upbeat revenue growth and share buybacks will drive up Meta's earnings per share.
"That is rare," analysts at Evercorse ISI said, referring to the positive developments. "And stocks react to rare."
The results also provided some relief to the market after an earnings meltdown at Snap Inc on Tuesday that had sent tech shares lower.
"After Snap's disaster, the fact that Meta wasn't quite so bad has brought encouragement to tech mega-caps," said Fiona Cincotta, analyst at City Index.
"There is also a less hawkish Fed (Federal Reserve), which is also boosting demand for growth and tech stocks generally."
"YEAR OF EFFICIENCY"
Meta now expects its 2023 expenses between $89 billion and $95 billion, a sharp drop from its previous outlook of $94 billion to $100 billion, with CEO Mark Zuckerberg calling the period
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