Meta Layoffs and Financial Restructuring

Target cuts and layoffs are becoming more common, but I don’t know. Layoffs have worked pretty well for Facebook’s financial restructuring and year of efficiency.

The Year of Efficiency

Yeah, exactly, year of efficiency. We’ve seen that work for the company. So far, we are getting reports from Reuters that Meta is planning to reduce its workforce again, though the company is expected to cut from the Agile Silicon team unit, which is part of the Reality Labs division. That unit is about 600 people, and we don’t yet know how many layoffs there will be.

Challenges with Augmented Reality Chips

But this is likely coming from a couple of places. This is the unit that develops those chips for augmented and virtual reality. Reports have been that they just really haven’t been able to make a competitive chip, and that’s why we’ve seen Qualcomm come in and provide chips for their Quest and the Ray-Ban sunglasses as well.

Focus on Cost-Cutting and Loss Reduction

And then, as you pointed out, year of efficiency is likely another reason for this. If they’re able to find an area where they can cut some costs, Reality Labs, we know, is the division they’re focusing on for the future. That’s an area where they lost about $13.7 billion in 2022 on just $2.16 billion of revenue.

Financial Impact of Layoffs

So, there’s an area where they are showing a lot of losses, and it’s possible to cut some of that with layoffs. Okay? So the cut is coming with it? I mean, is that related coincidence? It seems like the stock so far has given us no reason to think that layoffs are going to be a bad thing. Cleaning up the bottom line, no matter what it takes, is going to be a good thing because the stock still looks amazing, considering everything that’s happened in the last couple of months.

Stock Performance Amid Restructuring

It’s still off its July high, like the broad market, but barely—talking $26, a little less than 10% off its high. I mean, you know, that’s not bad—less than 8% actually. Yeah, absolutely. What the company has been able to do in terms of cost reduction and seeing some of the ad revenue come back has been impressive.

Excitement Around New Products

And, you know, I think there is some excitement around their Quest headset and the Ray-Ban sunglasses as well. The price cut really did focus on expenses. JPMorgan lowered the price target from $425 to $400, keeping that overweight rating on the shares. They remain positive on Meta’s shares.

JPMorgan’s Adjustments to Estimates

They reduced their 2024 and 2025 earnings estimates primarily to account for increases in expenses. They said the biggest change in their model is increasing the 2024 total expenses from $93.4 billion to $97.5 billion. They think Meta is going to guide in a range of $96 to $102 billion.

Future Outlook and Efficiency Goals

Typically, Meta is not going to comment on their forward revenue in conjunction with their four-year expense outlook, but they think it’s coming. Meta is focusing on efficiency and cost reduction, which seems to be positively impacting their financials and stock performance.