Today, Meta Platforms' shares witnessed an upward trend.
Meta Platforms (META) saw its shares rise today, driven by a less-than-expected inflation report, staff cuts announced by the company, and the potential TikTok ban in the US. This sent the stock soaring by 4.5% by 3 p.m. ET on Wednesday.
The stock market as a whole rose in response to the Bureau of Labor Statistics' news release showing the core Consumer Price Index (CPI) climbing by 3.2% in December, tying slightly below the 3.3% predicted by economists. Meta isn't directly impacted by interest rates, but its reliance on advertising for revenue means it's sensitive to the state of the economy. Lower interest rates often encourage business investment in ads, which is crucial for Meta's growth.
On Tuesday, reports suggested that Meta would be cutting 5% of its workforce, targeting lower-performing employees. The company had previously witnessed a boost in its stock value following large-scale layoffs at the end of 2022. Investors are hopeful that this round of layoffs will also contribute to improved profitability.
Furthermore, the potential TikTok ban may bring additional users to Meta's top two properties - Facebook and Instagram. TikTok is due to be banned in the US on Sunday if it fails to comply with regulations or the Supreme Court doesn't intervene. Meta has long been competing with TikTok through its short-form video product, Reels, and might gain even more users if TikTok is banned.
CEO Mark Zuckerberg hinted that 2025 would be a "challenging, intense year," possibly signaling new innovations or more aggressive development of existing products which could benefit the stock.
All in all, Meta Platforms' stock looks set to keep climbing, bolstered by beneficial economic conditions, strategic layoffs, and potential impact from a TikTok ban in the U.S. However, the company must be cautious in dealing with increased scrutiny from regulators due to the ban.
Given the potential TikTok ban and Meta's focus on its short-form video product Reels, some investors might see this as an opportunity for further investing in Meta's finance, aiming to capitalize on potential growth. The company's staff cuts and focus on improving profitability could also attract finance-savvy investors seeking to capitalize on potential financial gains.
