Benzinga - Meta Platforms, Inc. (NASDAQ: META) has been the second-best performing mega-cap stock this year after Nvidia Corp, (NASDAQ: NVDA). The stock has gained about 136% since it hit $88.09 on Nov. 4, 2022.
A former hedge fund manager delved deep into what has sent the stock skyrocketing.
4 Reasons For Meta Rally: A quarter of the upside could be due to the oversold levels of big-cap tech stocks at the end of last year, which has triggered bargain hunting in these stocks, said former hedge fund manager Whitney Tilson in his investment research firm Empire Financial’s daily newsletter.
The Mark Zuckerberg-led company may also be benefiting from the AI revolution that has taken hold, he said.
Rival short-video app TikTok has come under pressure amid political opposition to it and calls for banning. The Chinese app’s travails have proved to be a boon for Meta, he added.
The biggest factor, Tilson said, has been Meta’s decision to stop squandering billions of dollars, especially in the metaverse. He noted that the company laid off 11,000 employees in November and announced an incremental 10,000 job cuts earlier this month. Meta has cut 24% of its bloated workforce in a matter of only a few months, he said.
Tilson said he does not expect the layoffs to affect revenue even a bit and expects the savings to drop straight to the bottom line.
He also highlighted Zuckerberg’s hint at pivoting away from the metaverse and toward AI. “Our single largest investment is in advancing AI and building it into every one of our products. ,” said the tech CEO, Tilson noted.
“These are the kind of turnarounds I look for as an investor: ones that don't require the company to jump a seven-foot bar, but instead just stop being stupid..,” the former fund manager said.
Meta Price Action: Meta closed Thursday’s session at $207.84, up 1.21%, according to Benzinga Pro data.
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