Meta’s stock is wrapping up a record year, spurred by cost cuts that followed a disastrous 2022
Meta founder and CEO Mark Zuckerberg speaks during the Meta Connect event at Meta headquarters in Menlo Park, California, on Sept. 27, 2023.
Josh Edelson | AFP | Getty Images
Last year at this time, Meta was navigating a crisis of confidence that had pushed its stock price to its lowest since 2016. Sales were dropping, TikTok was rising, and CEO Mark Zuckerberg’s bet-the-house wager on the metaverse was looking like a money pit.
Wall Street saw a very different story play out in 2023.
As of Friday’s close, Meta shares are up 178% for the year, on pace for their best year ever, topping the 105% jump in 2013, which was the year after Facebook’s IPO. The stock rose another 3% on Monday to $344.64, its highest in two years. It’s now just 10% below its record reached in September 2021, near the peak of the latest tech boom.
Among companies in the S&P 500, only chipmaker Nvidia had a better year, climbing 235% as of Friday.
Meta’s mega bounceback validates Zuckerberg’s declaration in early February that 2023 would be the company’s “year of efficiency” following the stock’s 64% plunge in 2022. Hefty cost cuts were at the top of his agenda, with Facebook’s parent company cutting more than 20,000 jobs and Zuckerberg acknowledging that economic challenges, stepped-up competition and advertising losses “caused our revenue to be much lower than I’d expected.”
After three straight quarters of declining sales last year, growth returned in 2023, and for the third quarter Meta recorded expansion of 23%, its sharpest increase in two years. The results were driven by a rebound in digital advertising and market share gains over rivals Alphabet and Snap.
The biggest catalyst, according to Longbow Asset Management CEO Jake Dollarhide, was Zuckerberg’s “change of attitude” and his willingness to listen to shareholder concerns instead of seemingly dismissing them in favor of his preferred mode of operation.
While Zuckerberg continues to invest heavily in the metaverse, which he sees as his company’s future, he’s refocused the business toward what actually matters today — advertising — and responded to investor concerns about out-of-control spending.
“It was the change in tone from Zuck,” Dollarhide said. “He went from thumbing his nose at shareholders” and talking about the billions he was spending on the metaverse “to listening and communicating in a different way,” Dollarhide added.
Plenty of challenges remain as the calendar turns to 2024.
Meta said in its latest earnings report that the digital ad market is still rocky, in part because advertisers are weighing the potential impact of the Israel-Hamas war. The company is also dealing with a number of new lawsuits that allege its products are harmful and addictive to children. And virtual reality continues to be a niche market, despite Meta’s hefty promotions of its new Quest 3 headsets.
“As long as the core business is humming along and is kind of improving, I think investors will probably continue to give them a pass,” said John Blackledge, an analyst at Cowen who recommends buying the stock.
Meta declined to provide a comment for this story.
Meta has now had well over two years to adapt to one of the most harmful changes to its business in the almost two decades since Zuckerberg started the company in his Harvard dorm room. In 2021, Apple updated its iPhone operating system in a way that gave users more control over how they could be targeted with ads. The update hit at the heart of Facebook’s ad business and resulted in the loss of billions of dollars of revenue.
As hard as Apple’s privacy changes hurt Facebook, they were equally devastating to other social media companies, most notably Snap. But Meta quickly got to work rebuilding its ad technology, with a major investment in artificial intelligence, and in the latest quarter reported much faster revenue growth than Google or Snap.
China has been a big part of the story. Susan Li, Meta’s finance chief, told analysts on the earnings call that online commerce and gaming “benefited from spend among advertisers in China reaching customers in other markets.” That means Chinese companies are spending heavily on Facebook and Instagram to send targeted advertising to the company’s billions of users around the world.
A Shein pop-up store inside a Forever 21 store in Times Square in New York on Nov. 10, 2023.
Yuki Iwamura | Bloomberg | Getty Images
JMP analysts estimate that e-commerce companies Temu and Shein, which both have roots in China, spent about $600 million and $200 million, respectively, on ads with Meta in the third quarter, leading to year-over-year growth of 44% from Asian advertisers.
In addition to Apple’s changes, Meta was also hurt in 2022 by the rapid rise of TikTok, which pioneered the short-video market, and a rotation out of tech stocks due to rising interest rates and surging inflation. All the while, Zuckerberg’s big bet on the metaverse continued to pile up billions of dollars in losses, underscoring the challenges of making virtual reality and augmented reality technologies appealing to mainstream consumers.
Altimeter Capital Chair and CEO Brad Gerstner wrote an open letter to Meta and Zuckerberg in October 2022 urging the company to “get fit and focused” by cutting staff and reducing metaverse investments.
Tom Champion, an analyst at Piper Sandler, told CNBC that Meta had to adjust to a rapidly changing reality. During Covid, digital media and e-commerce took off and, because the economy remained strong at the time, consumers and businesses had plenty of money to spend.
“We all extrapolated the growth trends around digital advertising that emerged during the pandemic, and Meta management invested behind that extrapolation of the trend as well,” said Champion, who has a buy rating on the stock. “The revenue picture changed a hell of a lot faster than cost.”
A few weeks after the Altimeter letter, Zuckerberg announced the first of what would be three rounds of layoffs affecting about 25% of the company’s workforce. Zuckerberg admitted to miscalculating what would happen when the economy reopened from the pandemic.
Reasons for skepticism
Meta’s initial round of layoffs in 2022 helped kickstart the stock’s rebound.
Then in February, Meta revealed that its total expenses for 2023 would be in the range of $89 billion to $95 billion, which was lower than its prior 2023 outlook of $94 billion to $100 billion.
The shares shot up 76% in the first quarter.
Ultimately, it appears as if expenses will be even lower than that revised number. Meta said in October that total costs for the year will be between $87 billion and $89 billion.
But, as Blackledge notes, Zuckerberg has so far largely spared the Reality Labs unit, which houses the company’s work in metaverse hardware and software. Meta said in its third-quarter report that operating losses in Reality Labs will “increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem.”
The division lost $3.7 billion in the period and over $11 billion in the first nine months of the year.
Zuckerberg has spent much of the year touting Meta’s investments in AI, which has helped bolster its ad technology. Included in that conversation is the work Meta has done in building its large language model called Llama, which has gained popularity since OpenAI’s ChatGPT chatbot introduced the concept of generative AI to the mainstream.
“It’s a little tough for me to draw a line between a technology like Llama and the core business, but I think there are enough announcements and discussion and commentary from management to suggest that they are harnessing this technology in a lot of different ways,” Champion said.
Champion added that AI has helped Meta more efficiently operate its data centers, and he’s optimistic about the company’s use of AI to create more compelling digital assistants that could be useful for business messaging.
Despite Meta’s strong performance in 2023, Needham’s Laura Martin remains skeptical.
Martin has a sell rating on the stock, making her one of only two analysts tracked by FactSet without a buy or hold recommendation. She says 2024 will be a “cautionary tale” for the company because it still faces some major existential issues.
Meta doesn’t control a platform like Apple’s iOS or Google’s Android, which means it remains at risk of significant policy changes at those companies. While Meta eventually managed to weather Apple’s iOS privacy update through its AI investments, it now has to deal with Google’s upcoming plans to phase out third-party cookies in 2024, which will likely have a similarly weakening effect on its online ad business, Martin said.
“Cookie deprecation on Android is a big deal,” she said.
On top of that, Martin sees smart TVs as the area where advertisers are looking to divert spending as the major streaming platforms continue to pick up users who are abandoning linear television. That’s not Meta’s market.
Then there’s the influencer problem. Popular content creators are focusing their efforts on TikTok and YouTube, catering to younger audiences. A recent Pew Research Center study found that nearly 1 in 5 young adults say they use those video-streaming apps “almost constantly.”
TikTok, which is owned by China’s ByteDance, faces the risk of being shut down by U.S. lawmakers who have tried to make the case that it’s a national security concern. But that issue has been sidelined for months and in November a federal judge in Montana blocked a law that would have resulted in a statewide ban of TikTok starting in January.
Analysts aren’t expecting TikTok to go anywhere, meaning it will continue to pose a challenge to Meta.
“The regulators can’t get stuff done,” Martin said.
Piper Sandler’s Champion said he “personally can’t imagine in America where something like TikTok gets banned.” But he added, “Who knows — anything can happen.”
WATCH: Watch CNBC’s full interview with Liz Young, Sarat Sethi, Jim Lebenthal
Microsoft CEO Satya Nadella speaks at the Axel Springer building in Berlin on Oct. 17, 2023. He received the annual Axel Springer Award.
Ben Kriemann | Getty Images
Among the thousands of Microsoft employees who lost their jobs in the cutbacks announced this week were 830 staffers in the company’s home state of Washington.
Nearly a dozen game design workers in the state were part of the layoffs, along with three audio designers, two mechanical engineers, one optical engineer and one lab technician, according to a document Microsoft submitted to Washington employment officials.
There were also five individual contributors and one manager at the Microsoft Research division in the cuts, as well as 10 lawyers and six hardware engineers, the document shows.
Microsoft announced plans on Wednesday to eliminate 9,000 jobs, as part of an effort to eliminate redundancy and to encourage employees to focus on more meaningful work by adopting new technologies, a person familiar with the matter told CNBC. The person asked not to be named while discussing private matters.
Scores of Microsoft salespeople and video game developers have since come forward on social media to announce their departure. In April, Microsoft said revenue from Xbox content and services grew 8%, trailing overall growth of 13%.
In sales, the company parted ways with 16 customer success account management staff members based in Washington, 28 in sales strategy enablement and another five in sales compensation. One Washington-based government affairs worker was also laid off.
Microsoft eliminated 17 jobs in cloud solution architecture in the state, according to the document. The company’s fastest revenue growth comes from Azure and other cloud services that customers buy based on usage.
CEO Satya Nadella has not publicly commented on the layoffs, and Microsoft didn’t immediately provide a comment about the cuts in Washington. On a conference call with analysts in April, Microsoft CFO Amy Hood said the company had a “focus on cost efficiencies” during the March quarter.
WATCH: Microsoft layoffs not performance-based, largely targeting middle managers
Technology
IPO market gets boost from Circle’s 500% surge, sparking optimism that drought may be ending
Jeremy Allaire, CEO and co-founder of Circle Internet Group, the issuer of one of the world’s biggest stablecoins, and Circle Internet Group co-founder Sean Neville react as they ring the opening bell, on the day of the company’s IPO, in New York City, U.S., June 5, 2025.
NYSE
For over three years, venture capital firms have been waiting for this moment.
Tech IPOs came to a virtual standstill in early 2022 due to soaring inflation and rising interest rates, while big acquisitions were mostly off the table as increased regulatory scrutiny in the U.S. and Europe turned away potential buyers.
Though it’s too soon to say those days are entirely in the past, the first half of 2025 showed signs of momentum, with June in particular producing much-needed returns for Silicon Valley’s startup financiers. In all, there were five tech IPOs last month, accelerating from a monthly average of two since January, according to data from CB Insights.
Highlighting that group was crypto company Circle, which more than doubled in its New York Stock Exchange debut on June 5, and is now up sixfold from its IPO price for a market cap of $42 billion. The stock got a big boost in mid-June after the Senate passed the GENIUS Act, which would establish a federal framework for U.S. dollar-pegged stablecoins.
Venture firms General Catalyst, Breyer Capital and Accel now own a combined $8 billion worth of Circle stock even after selling a fraction of their holdings in the offering. Silicon Valley stalwarts Greylock, Kleiner Perkins and Sequoia Capital are set to soon profit from Figma’s IPO, after the design software vendor filed its public prospectus on Tuesday. Since its $20 billion acquisition agreement with Adobe was scrapped in late 2023, Figma has been one of the most hotly anticipated IPOs in startup land.
It’s “refreshing and something that we’ve been waiting for for a long time,” said Eric Hippeau, managing partner at early-stage venture firm Lerer Hippeau, regarding the exit environment. “I’m not sure that we are confident that this can be a sustained trend yet, but it’s been very encouraging.”
Another positive sign for the industry the past couple months was the performance of artificial infrastructure provider CoreWeave, which went public in late March. The stock was relatively stagnant for its first month on the market but shot up 170% in May and another 47% in June.
For venture firms, long considered the lifeblood of risky tech startups, IPOs are essential in order to generate profits for the university endowments, foundations and pension funds that allocate a portion of their capital to the asset class. Without handsome returns, there’s little incentive for limited partners to put money into future funds.
After a record year in 2021, which saw 155 U.S. venture-backed IPOs raise $60.4 billion, according to data from University of Florida finance professor Jay Ritter, every year since has been relatively dismal. There were 13 such offerings in 2022, followed by 18 in 2023 and 30 last year, collectively raising $13.3 billion, Ritter’s data shows.
The slowdown followed the Federal Reserve’s aggressive rate-hiking campaign in 2022, meant to slow crippling inflation. As the lower-growth environment extended into years two and three, venture firms faced increasing pressure to return cash to investors.
‘Backlog of liquidity’
In its 2024 yearbook, the National Venture Capital Association said that even with a 34% increase in U.S. VC exit value last year to $98 billion, that number is 87% below the 2021 peak and less than half the average for the four years from 2017 through 2020. It’s a troubling dynamic for the 58,000 venture-backed companies that have raised a total of $947 billion from investors, according to the annual report, which is produced by the NVCA and PitchBook.
“This backlog of liquidity drought risks creating a ‘zombie company’ cohort — businesses generating operational cash flow but lacking credible exit prospects,” the report said.
Other than Circle, the latest crop of IPOs mostly consists of smaller and lesser-known brands. Health-tech companies Hinge Health and Omada Health are valued at about $3.5 billion and $1 billion, respectively. Etoro, an online trading platform, has a market cap of just over $5 billion. Online banking provider Chime Financial has a higher profile due largely to a years-long marketing blitz and is valued at close to $11.5 billion.
Meanwhile, the highest valued private companies like SpaceX, Stripe and Databricks remain on the sidelines, and AI highfliers OpenAI and Anthropic continue to raise massive amounts of cash with no intention of going public anytime soon.
Still, venture capitalists told CNBC that there are plenty of companies with the financial metrics to be public, and that more of them are readying for the process.
“The IPO market is starting to open and the VC world is cautiously optimistic,” said Rick Heitzmann, a partner at venture firm FirstMark in New York. “We are preparing companies for the next wave of public offerings.”
There are other ways to make money in the meantime. Secondary sales, a process that involves selling private shares to new investors, are on the rise, allowing early employees and investors to get some liquidity.
And then there’s what Mark Zuckerberg is doing, as he tries to position his company at the center of AI innovation and development.
Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during the Meta Connect event on Wednesday, Sept. 25, 2024.
Bloomberg | Bloomberg | Getty Images
Last month, Meta announced a $14 billion bet on Scale AI, taking a 49% stake in the AI startup in exchange for poaching founder Alexandr Wang and a small group of his top engineers. The deal effectively bought out half of the stock owned by investors, leaving them with the opportunity to make money on the rest of their holdings, should a future acquisition or IPO take place.
The deal is a big win for Accel, which led Scale AI’s Series A round in 2017, and is poised to earn more than $2.5 billion in the transaction. Index Ventures led the Series B in 2018, and Peter Thiel’s Founders Fund led the Series C the following year at a valuation of over $1 billion.
Investors now hope the Federal Reserve will move toward a rate-cutting campaign, though the central bank hasn’t committed to one. There’s also ongoing optimism that regulators will make going public less burdensome. Last week, Reuters reported, citing sources familiar with the matter, that U.S. stock exchanges and the SEC have discussed loosening regulations to make IPOs more enticing.
Mike Bellin, who heads consulting firm PwC’s U.S. IPO practice, said he anticipates a diversity of IPOs across sectors in the second half of the year. According to data from PwC, pharma and fintech were among the most active sectors for deals through the end of May.
While the recent trend in IPO activity is an encouraging sign for investors, potential roadblocks remain.
Tariffs and geopolitical uncertainty delayed IPO plans from companies including Klarna and StubHub in April. Neither has provided an update on when they plan to debut.
FirstMark’s Heitzmann said the path forward is “not at all clear,” adding that he wants to see a strong quarter of economic stability and growth before confidently saying that the market is wide open.
Additionally, other than CoreWeave and Circle, recent tech IPOs haven’t had big pops. Hinge Health, Chime and eToro have seen relatively modest gains from their offer price, while Omada Health is down.
But virtually any activity beats what VCs were experiencing the last few years. Overall, Hippeau said recent IPO trends are generally encouraging.
“There’s starting to be kind of light at the end of the tunnel,” Hippeau said.
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