In 2022, big tech sell-off hammers Meta stock

Brian Sozzi, Yahoo Finance Live anchor, and Brad Smith reflect on Meta’s turbulent year, the stock’s fall, and major cost-cutting steps in 2022.

Video Transcript

BRAD SMITH After a turbulent year, we’re also keeping an eye on shares of Meta. The stock is now down by more than 60%, which joins many other battered members of the tech sector. Jared was looking at names from the top who have had a difficult year. I don’t know whether we have a year-to date chart of Meta Platforms, which we can use to see some of the movement. This has led to a few other things. The number one, perhaps most important, change in the amount of advertising dollars going digital is what this has brought back.

There is still a huge market for digital advertising. It really boils down to how much of those costs are being restructured by some of the largest advertisers and agencies managing ad spendings. This is because they are reducing their spends on Facebook Blue, or Instagram, which are popular platforms with younger audiences. Meta Platforms had earlier this year announced that they will be spending $10 billion to make the Metaverse real.

BRIAN SOZZI It would be difficult for me to justify any Meta actions, but I thought– Mark Mahaney from Evercore ISI said something yesterday that I think was very interesting and should be considered by all investors. Meta is arguably ahead of Amazon and Google in cutting costs by billions of dollars.

Meta’s cost-cutting efforts begin in the fourth quarter. Are they in the first or second quarters? This is something you might be interested in – even though sales are still under stress because of the economic environment, you could be imagining a major increase in profits for the company. However, a competitor such as Google or Amazon could still be announcing cost reductions in the middle next year.

BRAD SMITH Interesting. We take a look at some big tech and mega-cap tech names on the screen. As we talk about Meta’s decline over the year, we also discuss some other decliners I saw earlier when Jared put them up on the heatmap– Lucid Rivian Okta, Okta, and Peloton. These were all the Peloton plays, or, if you will excuse me the pandemic plays. Peloton was a pandemic show. Meta was certainly a beneficiary too of the screen-time growth that we witnessed over the course of this pandemic.

BRIAN SOZZI Lucid must make cars. Rivian must make cars and have a consistent production schedule. It’s one of the main reasons that stocks have dropped.