Mizuho positive on Meta Platforms efforts to drive further efficiency

By Sam Boughedda

Mizuho Securities analysts provided positive commentary on Meta Platforms (NASDAQ:) in a note to clients on Sunday, based on recent reports that the tech giant could initiate another round of layoffs at a similar scale to the last round at 13% of employees.

The reports state that the restructuring focuses on Meta’s wearable device units within its Metaverse division, while it is also reportedly shutting down its New Product Experiment Group, created in 2019.

“We applaud the company’s efforts to drive further efficiency during economic uncertainty, and FY23E consensus implies Reality Labs to incur expenses at 12% of revenues in FY23 (or $14bn), so the capacity for cost optimization is meaningful,” said the analysts, who maintained a Buy rating and $210 price target on the stock.

“Based on what has been reported, we estimate total savings of $1.1bn for FY23E could come from headcount reduction ($1.5bn x 3 quarters). Furthermore, we estimate additional potential cost savings of $1.1bn from discontinued products and projects in Metaverse and New Product Experiment Groups,” they added.

Mizuho calculates that total cost savings could reach $2.3 billion for FY23, or “nearly 7% upside to consensus FY23E OPI.”