A cascade of bad news made little difference to Meta Platforms. Its stock price rocketed 23% Thursday after what would ordinarily have been a disquieting fourth quarter earnings report. Turns out that investors in 2023 thus far are willing to shrug off uninspiring financial results among the battered tech giants.
Among that crew, Meta is an extreme case of tech bad news. In Thursday’s earnings call, CEO Mark Zuckerberg hardly cut back on his commitment to the multiverse, a strategy that many view as iffy. Costs swelled by 22% in the quarter, mainly due to the new strategy. Meta’s Q4 2022 results saw profits tumble by 55% and revenue by 4%. And the company took a $4.2 billion restructuring charge.
But Zuckerberg’s remarks during the earnings call signaled to Wall Street that there is hope. And investors bought it. During his talk, the CEO promised “a year of efficiency” ahead. He has trimmed 13% of Meta’s workforce and pledged to scrap new endeavors that were not working out—the metaverse evidently not among them.
He touted the company’s advances in artificial intelligence, which he said would power future earnings. And as a sweetener, Zuckerberg boosted the Meta stock buyback program this year to $40 billion, up from $28 billion in 2022.
A host of Wall Street firms responded by increasing their target price for Meta. Guggenheim, for instance, raised its target to $210 from $130, with a buy rating. Meta closed at just below $189 Thursday. Guggenheim analysts said in a note that they had “greater confidence that the company’s more disciplined investment approach will yield more sustainable cash flow growth than the prior plan.”
Meta’s good day in the stock market was mirrored by other Big Tech names that also shared Q4 results that were not wonderful. Apple missed earnings projections as iPhone sales fell short, but its stock rose 3.7% for the day. Amazon logged its worst loss on record, yet increased 7.8%. Google-parent Alphabet had small misses on earnings and revenue, yet jumped 7.3%.
Overall, the enthusiasm for these names drove the tech-heavy Nasdaq up 3.25% on Thursday, while the broader S&P 500 index was up 1.47% and the Dow – with few technology names – was off 0.11%.
This comes against a recent backdrop of friendlier investor treatment of technology names overall. Meta, Apple, Amazon and Alphabet are all up this year, following deep slides in 2022.
The Invesco QQQ Trust, an exchange-traded fund that tracks the largest technology companies, fell almost 33% in 2022, a painful reversal after a long upward trajectory. This year, the ETF is up 25%. Wedbush Securities analyst Daniel Ives, who said he believes that tech stocks’ poor showing last year was overdone, told fintech firm TipRanks’ newsletter that they will rise another 20% in 2023.