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Meta Platforms (NASDAQ:META) shares climbed more than 5% in pre-market trading Wednesday as Wall Street reacted positively to the Facebook parent’s plans to drastically cut costs by shedding 11,000 jobs at the social-media giant.
Meta (META) Chief Executive Mark Zuckerberg made the firings public in a message to company employees that was included in a filing with the U.S. Securities and Exchange Commission. Zuckerberg called the job cuts–which amount to approximately 13% of Meta’s (META) 87,000 employees–among “the most difficult changes we’ve made” in the company’s 18-year history.
Zuckerberg said that in addition to the layoffs, Meta (META) would extend a hiring freeze through the first quarter of 2023, and would “roll out more cost-cutting changes” in the coming months.
UBS analyst Lloyd Walmsley said that Meta’s (META) job cuts and new efforts to rein in expenses “signals that the company hears investors,” and that its plan to cut it 2023 operating expenses by $2B, just a few weeks after a disappointing quarterly earnings report, is “a clear sign the company ‘gets it'”.
Walmsley left his buy rating and $121-a-share price target on Meta’s (META) unchanged.
Zuckerberg humbled himself in his job-cut announcement, and said that he wanted to “take accountability” for how Meta (META) got to the point where it is holding its largest-ever layoff.
Zuckerberg said that when the Covid-19 pandemic started, and many companies saw a surge in their e-commerce business, he made the decision to “significantly increase our investments” as he and “many people predicted this would be a permanent acceleration that would continue even after the pandemic ended.”
But, Zuckerberg said that as the pandemic eased, factors such as a downturn in online business, increased competition and the loss of revenue from advertising caused Meta’s (META) revenue to come in much lower than expected.
“I got this wrong, and I take responsibility for that,” Zuckerberg said.