Have you ever watched a stock you love get absolutely crushed after an earnings call, only to roar back weeks later on news that most people would consider terrible? That’s exactly what happened Thursday when shares of the social media giant jumped nearly 4% — not because of blockbuster user growth, but because word leaked that the company is finally getting serious about slashing one of its biggest money-losing bets.
It felt almost surreal watching the ticker climb while headlines screamed “layoffs” and “budget cuts.” But for anyone who’s followed this company for the last few years, the move actually made perfect sense. Sometimes the market cheers when a CEO finally admits a grand vision went too far.
The Metaverse Dream Is Getting a Reality Check
Let’s be honest — the grand rebrand to Meta and the all-in bet on the metaverse never quite landed the way leadership hoped. Billions upon billions poured into virtual reality hardware and horizon worlds that, frankly, most people still aren’t using daily. The division responsible for all of it has been hemorrhaging cash at a historic rate.
We’re talking numbers that make your eyes water: close to $19 billion in operating losses this year alone, with projections pushing toward $24 billion in 2026 if nothing changed. That kind of burn rate turns even the most patient investors a little pale.
“This is what he does.”
— Stephanie Link, Chief Investment Strategist at Hightower Advisors
Stephanie Link has seen this movie before. She laid it out plainly on air: the pattern is almost clockwork. The company reports earnings, announces even higher capital spending for the next year (usually tied to moon-shot projects), the stock tanks, and then — a few weeks or months later — management comes out with cost-discipline announcements that spark a sharp relief rally.
From Hardware Obsession to AI Discipline
The shift happening right now feels different, though. This isn’t just trimming around the edges. Reports suggest the company is preparing to cut as much as 30% of the budget for its entire metaverse-focused division. That inevitably means significant job losses in the virtual and augmented reality teams.
And here’s the part that actually excites Wall Street: every dollar not spent on fancy VR headsets can go straight into the infrastructure that everyone is excited about — artificial intelligence and the massive data centers required to train tomorrow’s models.
In my view, that’s the real story. The market isn’t celebrating layoffs for layoffs’ sake. It’s celebrating a CEO who appears ready to stop fighting yesterday’s war and start dominating tomorrow’s.
Why Stephanie Link Is Aggressively Buying
Link didn’t mince words: “I’ve been adding and I will continue to buy.” She believes the stock remains dramatically undervalued even after Thursday’s bounce.
Think about it. The stock is still down roughly 20% from its post-earnings peak, while the broader Nasdaq has run more than 21% year-to-date. That gap feels wrong when you consider the core advertising business continues to grow revenue at a mid-teens pace and operating margins are expanding again.
- Advertising revenue still growing double-digits
- Reels adoption accelerating faster than anyone predicted
- AI-driven ad targeting improvements just starting to hit
- Cost structure finally showing real discipline
When you stack those drivers against a valuation that’s barely above the long-term average, it’s not hard to see why experienced investors are stepping in.
Wall Street’s Overwhelmingly Bullish Consensus
Link isn’t alone. The average price target from analysts now sits more than 25% above Thursday’s closing price, with virtually every major firm maintaining a Buy or Strong Buy rating.
That kind of unanimous conviction is rare in big-cap tech these days. Usually you’ll find at least a couple of bears warning about regulatory risk or saturation. Right now? Crickets.
Even traditionally cautious shops have warmed to the story as evidence mounts that management has truly changed course on spending.
The Apple Designer Defection Says Everything
Another under-the-radar detail that caught my attention: one of Apple’s most senior user-interface designers reportedly just jumped ship to join Meta. If that doesn’t signal serious ambition in consumer-facing AI experiences, I don’t know what does.
Remember, this is the company that once lured away Apple’s head of silicon. When top creative talent starts voting with their feet, smart investors pay attention.
What Could Go Wrong? Plenty — But Less Than Before
Look, nobody’s saying the road ahead is risk-free. Regulators around the world still have the company in their crosshairs. Teen usage trends remain a long-term question mark. And yes, AI infrastructure spending will stay enormous for years.
But here’s the difference: for the first time in several years, the biggest self-inflicted wound — the unlimited budget for a metaverse that wasn’t arriving fast enough — appears to be closing.
That alone removes what was probably the single largest overhang on the stock.
The Bottom Line for Investors
If you’ve been waiting for a signal that the worst of the “metaverse hangover” is behind us, Thursday’s price action and the accompanying reports might just be it.
The core business remains one of the most powerful cash-flow machines in technology. The pivot toward AI infrastructure is perfectly timed. And management finally appears willing to make the hard choices that protect shareholder value.
In a market where growth at a reasonable price is increasingly scarce, that combination feels pretty compelling. I wouldn’t be surprised to see this name play catch-up to the rest of big tech over the next 12–18 months.
Whether you’re already long or sitting on the sidelines, the message from Thursday seems clear: the punishment phase may finally be giving way to the reward phase.
