Meta Stock Rallies on Job Cuts. Zuckerberg Is Finally Listening to Wall Street.
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Meta Stock Rallies on Job Cuts. Zuckerberg Is Finally Listening to Wall Street.

By ERIC J. SAVITZ
Thu, Nov 10, 2022 8:40amGrey Clock 3 min

Mark Zuckerberg finally caved.

The Meta Platforms founder and CEO announced Wednesday morning that the company is cutting about 11,000 jobs, reducing head count by 13%. Meta shares, which have been sliding all year, have rallied 6.8% on the news, which suggests that the parent of Facebook, Instagram and WhatsApp has finally accepted that it needs to take steps to shore up its struggling business.

The stock plunged 25% following the company’s recent third-quarter earnings report, largely because of a stunning projection for higher operating and capital expenses for 2023. A few days before Meta reported results, Altimeter Capital founder Brad Gerstner wrote an open letter to Zuckerberg urging him cut spending.

“Meta has drifted into the land of excess,” he wrote. “Too many people, too many ideas, too little urgency.”

Wednesday’s announcement suggest that Zuckerberg is finally paying attention to investors’ concerns, much to the relief of investors and analysts alike.

“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” Zuckerberg said in a letter to Meta’s employees. “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”

The CEO said that not only has online commerce returned to prior trends, but the weakening economy, increased competition, and “ads signal loss” have left Meta with much less revenue than he expected. “I got this wrong, and I take responsibility for that,” he wrote.

The question investors now face is whether Zuckerberg is doing enough to address the company’s new reality, which includes more intense competition for ad dollars from TikTok, Amazon.com (AMZN), Apple (AAPL), Netflix (NFLX), and others; a softening advertising environment; and the lingering effects of Apple’s focus on protecting the privacy of iPhone users. Worries remain that the company’s huge push to build the metaverse won’t ever generate a payoff.

In addition to the layoffs, Meta confirmed its forecast for fourth-quarter revenue of $30 billion to $32.5 billion. Meta said the outlook for 2022 expenses it provided on the call to discuss its latest earnings already contemplated the newly announced cuts, and remains unchanged at $85 billion to $87 billion.

But the company also said it now sees 2023 expenses of $94 billion to $100 billion, which compares with a previous forecast of $96 billion to $101 billion, reflecting reduced hiring plans for next year. That amounts to a $1.5 billion cut, based on the midpoints of those ranges.

Capital spending in 2023 is expected to be between $34 billion and $37, the company said, reducing the top end of the forecast range from $39 billion. Meta also confirmed that it expects operating losses in Reality Labs, the business segment that includes VR headsets and the metaverse, to “grow significantly” in 2023 from 2022.

Analysts, particularly those who are bullish on Metal stock, reacted to the news with relief.

“Meta and Zuckerberg heard loud and clear the massively negative investor reaction to perceived lack of cost discipline during the Q3 EPS results…and have pivoted,” Evercore ISI analyst Mark Mahaney wrote in a research note. “It is clear to us that a lack of cost discipline is far and away the #1 issue weighing on Meta shares…and we think today’s news directly addressed this concern.” Mahaney kept an Outperform rating on the stock, with a target of $170 for the price.

Shares were near $103 on Wednesday afternoon, leaving them down 69% so far this year.

RBC Capital analyst Brad Erickson calculates that the operating-expense reduction connected with the job cuts could boost 2023 profits by 45 cents a share, while lower capital spending could add another 5 to 7 cents a share.

“While this announcement does nothing to alleviate the concerns around competition, signal loss and the perception of excessive Metaverse investment, it is the first sign the CEO has shown of being willing to acquiesce to shareholders’ desire for investing a bit more judiciously given the various headwinds the business faces,” Erickson said in a research note. Erickson maintained his Outperform rating and $150 target price on the stock.

J.P. Morgan analyst Doug Anmuth, who continues to rate Meta stock at Neutral, wrote that while he had hoped to see the 2023 expense outlook come down more, “the workforce reduction overall is likely bigger than most people had expected and shows management is operating with increased discipline.”

MKM Partners analyst Rohit Kulkarni expressed a similar view, saying that while the layoff were painful and might be demoralizing for the remaining staff, the cuts are a step in the right direction and show that “Zuckerberg cares about near-term investor expectations.” Kulkarni kept a Buy rating on the stock with a target of $140 for the price.



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The Uglification of Everything

Artistic culture has taken a repulsive turn. It speaks of a society that hates itself, and hates life.

By Peggy Noonan
Fri, Apr 26, 2024 5 min

I wish to protest the current ugliness. I see it as a continuing trend, “the uglification of everything.” It is coming out of our culture with picked-up speed, and from many media silos, and I don’t like it.

You remember the 1999 movie “The Talented Mr. Ripley,” from the Patricia Highsmith novel. It was fabulous—mysteries, murders, a sociopath scheming his way among high-class expats on the Italian Riviera. The laid-back glamour of Jude Law, the Grace Kelly-ness of Gwyneth Paltrow, who looks like a Vogue magazine cover decided to take a stroll through the streets of 1950s Venice, the truly brilliant acting of Matt Damon, who is so well-liked by audiences I’m not sure we notice anymore what a great actor he is. The director, Anthony Minghella, deliberately showed you pretty shiny things while taking you on a journey to a heart of darkness.

There’s a new version, a streaming series from Netflix, called “Ripley.” I turned to it eagerly and watched with puzzlement. It is unrelievedly ugly. Grimy, gloomy, grim. Tom Ripley is now charmless, a pale and watchful slug slithering through ancient rooms. He isn’t bright, eager, endearing, only predatory. No one would want to know him! Which makes the story make no sense. Again, Ripley is a sociopath, but few could tell because he seemed so sweet and easy. In the original movie, Philip Seymour Hoffman has an unforgettable turn as a jazz-loving, prep-schooled, in-crowd snob. In this version that character is mirthless, genderless, hidden. No one would want to know him either. Marge, the Paltrow role in the movie, is ponderous and plain, like a lost 1970s hippie, which undercuts a small part of the tragedy: Why is the lovely woman so in love with a careless idler who loves no one?

The ugliness seemed a deliberate artistic decision, as did the air of constant menace, as if we all know life is never nice.

I go to the No. 1 program on Netflix this week, “Baby Reindeer.” People speak highly of it. It’s about a stalker and is based on a true story, but she’s stalking a comic so this might be fun. Oh dear, no. It is again unrelievedly bleak. Life is low, plain and homely. No one is ever nice or kind; all human conversation is opaque and halting; work colleagues are cruel and loud. Everyone is emotionally incapable and dumb. No one laughs except for the morbidly obese stalker, who cackles madly. The only attractive person is the transgender girlfriend, who has a pretty smile and smiles a lot, but cries a lot too and is vengeful.

Good drama always makes you think. I thought: Do I want to continue living?

I go to the Daily Mail website, once my guilty pleasure. High jinks of the rich and famous, randy royals, fast cars and movie stars, models and rock stars caught in the drug bust. It was great! But it seems to have taken a turn and is more about crime, grime, human sadness and degradation—child abuse, mothers drowning their babies, “Man murders family, self.” It is less a portal into life’s mindless, undeserved beauty, than a testimony to its horrors.

I go to the new “Cabaret.” Who doesn’t love “Cabaret”? It is dark, witty, painful, glamorous. The music and lyrics have stood the test of time. The story’s backdrop: The soft decadence of Weimar is being replaced by the hard decadence of Nazism.

It is Kander and Ebb’s masterpiece, revived again and again. And this revival is hideous. It is ugly, bizarre, inartistic, fundamentally stupid. Also obscene but in a purposeless way, without meaning.

I had the distinct feeling the producers take their audience to be distracted dopamine addicts with fractured attention spans and no ability to follow a story. They also seemed to have no faith in the story itself, so they went with endless pyrotechnics. This is “Cabaret” for the empty-headed. Everyone screams. The songs are slowed, because you might need a moment to take it in. Almost everyone on stage is weirdly hunched, like a gargoyle, everyone overacts, and all of it is without art.

On the way in, staffers put stickers on the cameras of your phone, “to protect our intellectual property,” as one said.

It isn’t an easy job to make the widely admired Eddie Redmayne unappealing, but by God they did it. As he’s a producer I guess he did it, too. He takes the stage as the Emcee in a purple leather skirt with a small green cone on his head and appears further on as a clown with a machine gun and a weird goth devil. It is all so childish, so plonkingly empty.

Here is something sad about modern artists: They are held back by a lack of limits.

Bob Fosse, the director of the classic 1972 movie version, got to push against society’s limits and Broadway’s and Hollywood’s prohibitions. He pushed hard against what was pushing him, which caused friction; in the heat of that came art. Directors and writers now have nothing to push against because there are no rules or cultural prohibitions, so there’s no friction, everything is left cold, and the art turns in on itself and becomes merely weird.

Fosse famously loved women. No one loves women in this show. When we meet Sally Bowles, in the kind of dress a little girl might put on a doll, with heavy leather boots and harsh, garish makeup, the character doesn’t flirt, doesn’t seduce or charm. She barks and screams, angrily.

Really it is harrowing. At one point Mr. Redmayne dances with a toilet plunger, and a loaf of Italian bread is inserted and removed from his anal cavity. I mentioned this to my friend, who asked if I saw the dancer in the corner masturbating with a copy of what appeared to be “Mein Kampf.”

That’s what I call intellectual property!

In previous iterations the Kit Kat Club was a hypocrisy-free zone, a place of no boundaries, until the bad guys came and it wasn’t. I’m sure the director and producers met in the planning stage and used words like “breakthrough” and “a ‘Cabaret’ for today,” and “we don’t hide the coming cruelty.” But they do hide it by making everything, beginning to end, lifeless and grotesque. No innocence is traduced because no innocence exists.

How could a show be so frantic and outlandish and still be so tedious? It’s almost an achievement.

And for all that there is something smug about it, as if they’re looking down from some great, unearned height.

I left thinking, as I often do now on seeing something made ugly: This is what purgatory is going to be like. And then, no, this is what hell is going to be like—the cackling stalker, the pale sociopath, Eddie Redmayne dancing with a plunger.

Why does it all bother me?

Because even though it isn’t new, uglification is rising and spreading as an artistic attitude, and it can’t be good for us. Because it speaks of self-hatred, and a society that hates itself, and hates life, won’t last. Because it gives those who are young nothing to love and feel soft about. Because we need beauty to keep our morale up.

Because life isn’t merde, in spite of what our entertainment geniuses say.

 

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