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Meta Platforms (NASDAQ:META) may be preparing to cut more staff, according to a report in the Financial Times.
The FT report cited several Meta employees who were talking about a lack of clarity and forward planning. Meta laid off 11,000 workers in November – 13% of its global headcount. The social media giant is now planning more job cuts, which is reportedly leaving staff “demotivated and demoralized.”
The report comes after CEO Mark Zuckerberg said on an earnings call that he wants 2023 to be the “year of efficiency.” He also talked about using AI tools to improve employee productivity.
“The article was light on the potential size of any layoffs, but we see room for additional efficiencies as the company was operating with 58k employees just 2 years ago (vs roughly 76k estimated today),” BofA analysts wrote in a client note.
The analysts highlight that Meta still has the highest Opex among major online media companies.
“While Metaverse spend may be inflating Meta’s Opex by up to 25%, based on peer benchmarking, we believe there is scope to further reduce Meta’s cost structure,” the analysts added.
Overall, they are positive about Meta’s “new efficiency mentality.” They reiterated a Buy rating and a $220 per share price target.
“We see Meta as a more defensive stock in the sector this year with potential for cost rationalization to provide more downside support to EPS in a recession scenario than industry peers. Moreover, given the operating leverage in the business model, a declining employee base would also translate into higher profitability as the advertising environment improves and/or Reels monetization ramps,” the analysts concluded.
Meta shares are up over 2% in pre-market Monday following the FT report.
