Meta Platforms Inc.’s job cuts won’t help the company reignite revenue growth, but they’re still a reason to like the social-media stock, according to an analyst.
Argus Research analyst Joseph Bonner upgraded Meta’s stock META,
Meta is in the process of making “some of the deepest cost cuts in the tech sector,” in Bonner’s view, as the company has announced two sizable rounds of layoffs. Beyond Twitter, which slashed more than half its staff as Elon Musk took over the company, Meta’s headcount reduction is “significantly greater than at most peers.”
Besides the cost cuts, Meta has other factors working in its favor as well, Bonner wrote, especially as some of its competitors experience problems. TikTok faces pushback from the U.S. government, while Twitter “has made a series of erratic strategic moves” under Musk’s leadership “that have hobbled the company.”
“We believe that challenges at TikTok and Twitter could benefit Meta, which continues to add users to its platform,” Bonner wrote, noting that “an outright ban of TikTok is by no means certain, any regulatory trouble for this disruptive upstart would be a positive for Meta.”
Meta “is almost entirely dependent on advertising revenue,” Bonner noted, and like other social-media players, it’s tried to diversify a bit. One new initiative is a subscription program that lets creators and others verify their identities.
“It remains unclear whether the new service will provide significant new revenue, though any incremental revenue should be ‘found money’ for Meta,” he wrote.
Bonner joins several other analysts who’ve turned bullish on Meta’s shares in the wake of recent cost-cutting moves.
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Despite the latest upgrade, Meta shares are off 1.8% in midday trading Wednesday.
