Meta analyst projects potential cost savings from new round of layoffs, mostly from Metaverse

mizuho Analyst James Lee reiterates Buy Meta Platforms Inc (Nasdaq: META) with a $210 price target,
Several major news outlets indicated that Meta may launch another round of layoffs On the same scale as the last round at 13% of employees.
Reportedly, the focus of the restructuring is the wearable devices units within the Metaverse division.
At the same time, the company is reportedly shutting down its New Product Experiment Group created in 2019.
Meta will transition any new development efforts into existing product development teams.
Lee applauded the company’s efforts to bring in more efficiencies during the economic uncertainty, and the FY23E consensus means Reality Labs to spend 12% of revenue (or $14 billion) in FY23. Therefore, the ability to optimize costs is meaningful.
Based on reports, the analyst estimates that total savings of $1.1 billion for FY23E could come from reduction in headcount.
In addition, analysts estimate an additional $1.1 billion in potential cost savings from discontinued products and projects in the Metaverse and New Product Experimentation clusters.
Lee estimates that total cost savings for FY23 could reach $2.3 billion, or about 7% above the consensus FY23E OPI.
The analyst sees further catalysts if the reported restructuring is executed along with OpEx savings from discontinued products.
Price Action: At last check Monday, Meta shares were trading up 1.71% at $182.58.

date	firm	Work	From	To
July 2020	Desjardins	turns on coverage		Purchase