Why did Meta stock jump 5% today? CEO Zuckerberg’s new plans excites market

Meta Platforms' Stock Rises as Zuckerberg Prepares Big Changes to Metaverse Plans

Meta Platforms' stock experienced a significant boost of around 5% on Thursday, following reports that CEO Mark Zuckerberg is considering substantial changes to the company's metaverse plans.

Metaverse Budget Cuts and Potential Layoffs

• Executives are discussing a potential 30% reduction in the metaverse budget for next year, as reported by Bloomberg.
• Spending reductions are expected for Horizon Worlds and the Quest virtual reality business.
• Layoffs could occur as early as January, although no final decisions have been made yet.

Reasons Behind the Shift in Priorities

Meta is shifting its focus from the metaverse to artificial intelligence (AI) technology and infrastructure, following the growing interest in AI since the arrival of ChatGPT in late 2022. This change is likely due to investors' concerns about the metaverse's high costs and lower-than-expected industry competition.

Meta's Investment in AI and Future Plans

• Meta is investing heavily in AI technology and infrastructure, which investors believe could lead to better long-term growth.
• Reality Labs, the division behind the metaverse, has lost over $70 billion since Facebook changed its name to Meta in 2021.
• Meta's new design studio, led by former Apple design leader Alan Dye, will focus on building hardware with a stronger emphasis on AI instead of the metaverse.
• Meta's Ray-Ban Meta smart glasses are an example of the company's shift towards AI-driven products.

Impact on Meta's Stock Price and Future Plans

Meta's stock price has risen around 4.666% following the news, with investors showing relief at the potential cuts to metaverse spending. The company's stock is now moving closer to its 200-day and 50-day moving averages, indicating a possible recovery after a weaker-than-expected year.

Mark Zuckerberg wrote on Threads: "We're entering a new era where AI glasses and other devices will change how we connect with technology and each other. The potential is enormous, but what matters most is making these experiences feel natural and truly centered around people. With this new studio, we're focused on making every interaction thoughtful, intuitive, and built to serve people."

What Happens Next?

The news of metaverse spending cuts has brought relief to investors, with Meta's stock price recovering slowly after a drop following its third-quarter results in October. As the company shifts its focus to AI technology and infrastructure, investors will be closely watching Meta's future plans and progress.