Meta layoffs 'consistent' with operating philosophy, increased role of AI: Baird
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Meta Platforms' (NASDAQ:META) announcement on Monday that it would let go another 10,000 employees while closing 5,000 open positions is "consistent" with the company's operating philosophy and a sign that artificial intelligence is playing an increased role in the company, investment firm Baird said on Wednesday.
Analyst Colin Sebastian, who has an outperform rating on the Mark Zuckerberg-led company, noted that while the announcement is a surprise given the close proximity to the last layoff announcement, is a sign the company is serious about being more efficient.
"What we are seeing now is the realization that AI can automate at least some day-to-day workflows," Sebastian wrote in an investor note. Sebastian raised his per-share price target to $220 from $205, following the news.
In addition, Baird's Sebastian highlighted Meta's (META) use of "Buck2" new open source build system and culling lower-priority projects and flattening the organization structure as positives the company is taking to boost its efficiency.
Though Meta (META) announced the layoffs and lowered its expense guidance for 2023, Sebastian conceded that it's possible the layoffs could impact morale, given that some employees may not know for weeks or months if they've been impacted by the reduction in workforce.
Meta (META) shares fell fractionally in mid-day trading on Wednesday.
On Monday, Meta (META) confirmed that it was looking to divest Kustomer, a business-software company it acquired just last year.