Meta’s stock wrapping up record year, spurred by cost cuts that followed 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. At $334.92, the stock is roughly 12% below its record high 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% so far.
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.”
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Formula One F1 – United States Grand Prix – Circuit of the Americas, Austin, Texas, U.S. – October 23, 2022 Tim Cook waves the chequered flag to the race winner Red Bull’s Max Verstappen
Mike Segar | Reuters
Apple had two major launches last month. They couldn’t have been more different.
First, Apple revealed some of the artificial intelligence advancements it had been working on in the past year when it released developer versions of its operating systems to muted applause at its annual developer’s conference, WWDC. Then, at the end of the month, Apple hit the red carpet as its first true blockbuster movie, “F1,” debuted to over $155 million — and glowing reviews — in its first weekend.
While “F1” was a victory lap for Apple, highlighting the strength of its long-term outlook, the growth of its services business and its ability to tap into culture, Wall Street’s reaction to the company’s AI announcements at WWDC suggest there’s some trouble underneath the hood.
“F1” showed Apple at its best — in particular, its ability to invest in new, long-term projects. When Apple TV+ launched in 2019, it had only a handful of original shows and one movie, a film festival darling called “Hala” that didn’t even share its box office revenue.
Despite Apple TV+ being written off as a costly side-project, Apple stuck with its plan over the years, expanding its staff and operation in Culver City, California. That allowed the company to build up Hollywood connections, especially for TV shows, and build an entertainment track record. Now, an Apple Original can lead the box office on a summer weekend, the prime season for blockbuster films.
The success of “F1” also highlights Apple’s significant marketing machine and ability to get big-name talent to appear with its leadership. Apple pulled out all the stops to market the movie, including using its Wallet app to send a push notification with a discount for tickets to the film. To promote “F1,” Cook appeared with movie star Brad Pitt at an Apple store in New York and posted a video with actual F1 racer Lewis Hamilton, who was one of the film’s producers.
(L-R) Brad Pitt, Lewis Hamilton, Tim Cook, and Damson Idris attend the World Premiere of “F1: The Movie” in Times Square on June 16, 2025 in New York City.
Jamie Mccarthy | Getty Images Entertainment | Getty Images
Although Apple services chief Eddy Cue said in a recent interview that Apple needs the its film business to be profitable to “continue to do great things,” “F1” isn’t just about the bottom line for the company.
Apple’s Hollywood productions are perhaps the most prominent face of the company’s services business, a profit engine that has been an investor favorite since the iPhone maker started highlighting the division in 2016.
Films will only ever be a small fraction of the services unit, which also includes payments, iCloud subscriptions, magazine bundles, Apple Music, game bundles, warranties, fees related to digital payments and ad sales. Plus, even the biggest box office smashes would be small on Apple’s scale — the company does over $1 billion in sales on average every day.
But movies are the only services component that can get celebrities like Pitt or George Clooney to appear next to an Apple logo — and the success of “F1” means that Apple could do more big popcorn films in the future.
“Nothing breeds success or inspires future investment like a current success,” said Comscore senior media analyst Paul Dergarabedian.
But if “F1” is a sign that Apple’s services business is in full throttle, the company’s AI struggles are a “check engine” light that won’t turn off.
Replacing Siri’s engine
At WWDC last month, Wall Street was eager to hear about the company’s plans for Apple Intelligence, its suite of AI features that it first revealed in 2024. Apple Intelligence, which is a key tenet of the company’s hardware products, had a rollout marred by delays and underwhelming features.
Apple spent most of WWDC going over smaller machine learning features, but did not reveal what investors and consumers increasingly want: A sophisticated Siri that can converse fluidly and get stuff done, like making a restaurant reservation. In the age of OpenAI’s ChatGPT, Anthropic’s Claude and Google’s Gemini, the expectation of AI assistants among consumers is growing beyond “Siri, how’s the weather?”
The company had previewed a significantly improved Siri in the summer of 2024, but earlier this year, those features were delayed to sometime in 2026. At WWDC, Apple didn’t offer any updates about the improved Siri beyond that the company was “continuing its work to deliver” the features in the “coming year.” Some observers reduced their expectations for Apple’s AI after the conference.
“Current expectations for Apple Intelligence to kickstart a super upgrade cycle are too high, in our view,” wrote Jefferies analysts this week.
Siri should be an example of how Apple’s ability to improve products and projects over the long-term makes it tough to compete with.
It beat nearly every other voice assistant to market when it first debuted on iPhones in 2011. Fourteen years later, Siri remains essentially the same one-off, rigid, question-and-answer system that struggles with open-ended questions and dates, even after the invention in recent years of sophisticated voice bots based on generative AI technology that can hold a conversation.
Apple’s strongest rivals, including Android parent Google, have done way more to integrate sophisticated AI assistants into their devices than Apple has. And Google doesn’t have the same reflex against collecting data and cloud processing as privacy-obsessed Apple.
Some analysts have said they believe Apple has a few years before the company’s lack of competitive AI features will start to show up in device sales, given the company’s large installed base and high customer loyalty. But Apple can’t get lapped before it re-enters the race, and its former design guru Jony Ive is now working on new hardware with OpenAI, ramping up the pressure in Cupertino.
“The three-year problem, which is within an investment time frame, is that Android is racing ahead,” Needham senior internet analyst Laura Martin said on CNBC this week.
Apple’s services success with projects like “F1” is an example of what the company can do when it sets clear goals in public and then executes them over extended time-frames.
Its AI strategy could use a similar long-term plan, as customers and investors wonder when Apple will fully embrace the technology that has captivated Silicon Valley.
Wall Street’s anxiety over Apple’s AI struggles was evident this week after Bloomberg reported that Apple was considering replacing Siri’s engine with Anthropic or OpenAI’s technology, as opposed to its own foundation models.
The move, if it were to happen, would contradict one of Apple’s most important strategies in the Cook era: Apple wants to own its core technologies, like the touchscreen, processor, modem and maps software, not buy them from suppliers.
Using external technology would be an admission that Apple Foundation Models aren’t good enough yet for what the company wants to do with Siri.
“They’ve fallen farther and farther behind, and they need to supercharge their generative AI efforts” Martin said. “They can’t do that internally.”
Apple might even pay billions for the use of Anthropic’s AI software, according to the Bloomberg report. If Apple were to pay for AI, it would be a reversal from current services deals, like the search deal with Alphabet where the Cupertino company gets paid $20 billion per year to push iPhone traffic to Google Search.
The company didn’t confirm the report and declined comment, but Wall Street welcomed the report and Apple shares rose.
In the world of AI in Silicon Valley, signing bonuses for the kinds of engineers that can develop new models can range up to $100 million, according to OpenAI CEO Sam Altman.
“I can’t see Apple doing that,” Martin said.
Earlier this week, Meta CEO Mark Zuckerberg sent a memo bragging about hiring 11 AI experts from companies such as OpenAI, Anthropic, and Google’s DeepMind. That came after Zuckerberg hired Scale AI CEO Alexandr Wang to lead a new AI division as part of a $14.3 billion deal.
Meta’s not the only company to spend hundreds of millions on AI celebrities to get them in the building. Google spent big to hire away the founders of Character.AI, Microsoft got its AI leader by striking a deal with Inflection and Amazon hired the executive team of Adept to bulk up its AI roster.
Apple, on the other hand, hasn’t announced any big AI hires in recent years. While Cook rubs shoulders with Pitt, the actual race may be passing Apple by.
Tesla CEO Elon Musk speaks alongside U.S. President Donald Trump to reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC.
Kevin Dietsch | Getty Images
Tesla CEO Elon Musk, who bombarded President Donald Trump‘s signature spending bill for weeks, on Friday made his first comments since the legislation passed.
Musk backed a post on X by Sen. Rand Paul, R-Ky., who said the bill’s budget “explodes the deficit” and continues a pattern of “short-term politicking over long-term sustainability.”
The House of Representatives narrowly passed the One Big Beautiful Bill Act on Thursday, sending it to Trump to sign into law.
Paul and Musk have been vocal opponents of Trump’s tax and spending bill, and repeatedly called out the potential for the spending package to increase the national debt.
On Monday, Musk called it the “DEBT SLAVERY bill.”
The independent Congressional Budget Office has said the bill could add $3.4 trillion to the $36.2 trillion of U.S. debt over the next decade. The White House has labeled the agency as “partisan” and continuously refuted the CBO’s estimates.
The bill includes trillions of dollars in tax cuts, increased spending for immigration enforcement and large cuts to funding for Medicaid and other programs.
It also cuts tax credits and support for solar and wind energy and electric vehicles, a particularly sore spot for Musk, who has several companies that benefit from the programs.
“I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!” Trump wrote in a social media post in early June as the pair traded insults and threats.
Shares of Tesla plummeted as the feud intensified, with the company losing $152 billion in market cap on June 5 and putting the company below $1 trillion in value. The stock has largely rebounded since, but is still below where it was trading before the ruckus with Trump.
Tesla one-month stock chart.
— CNBC’s Kevin Breuninger and Erin Doherty contributed to this article.
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