‘Meta stock experiences 8% surge after successful earnings, attributed to the fruitful ‘year of efficiency’ strategy’

Shares of Meta soared over 8% during early trading on Thursday following the release of their second-quarter results, which exceeded analysts’ expectations. The company reported earnings per share of $2.98, surpassing the estimated $2.91 per share. Revenue also jumped 11% to $32 billion, higher than the projected $31.12 billion.

For the third quarter, the company forecast revenue between $32 billion and $34.5 billion, exceeding analysts’ expectations of $31.3 billion.

The positive results indicate a successful implementation of Meta CEO Mark Zuckerberg’s “year of efficiency” strategy, aimed at reducing costs and improving profitability.

“Management’s continued focus on efficiency has resulted in a shift in company mentality. While investments in infrastructure and talent are still a priority, we anticipate a balance between driving growth and maximizing returns,” wrote Goldman Sachs analyst Eric Sheridan in a note.

Additionally, analysts praised Meta’s strong user engagement, increasing monetization of Reels (its TikTok rival), and successful investments in artificial intelligence.

Bank of America analyst Justin Post raised the price target for Meta shares to $375 and reiterated a buy rating, highlighting the company’s improved tech stack, Reels strategy, and market share gains.

However, some analysts expressed concerns about Meta’s investments in the metaverse, particularly the growing losses in the Reality Labs unit, which reported an operating loss of $3.7 billion in the second quarter. Meta expects these losses to continue this year and increase significantly in 2024.

CNBC’s Michael Bloom contributed to this report.

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