Why Meta Platforms stock went up today

On By Littum

Shares of Meta platforms (META 0.38%) rose today as the social media giant benefited from a cooler-than-expected inflation report, the company’s announcement yesterday that it would lay off 5% of its staff and the impending TikTok ban, which could give a boost to Facebook and Instagram, the company’s two best properties.

The stock rose 4.5% as of 3 PM ET Wednesday.

A person looking at their smartphone and listening through headphones.

Image source: Getty Images.

Meta is benefiting from a rising tide

Stocks rose broadly today in response to the latest news release from the Bureau of Labor Statistics. The core consumer price index (CPI) rose 3.2% in December, slightly lower than the 3.3% economists had forecast.

Although Meta is not directly affected by interest rates, it makes its money from advertising, meaning it is sensitive to the health of the economy, and lower interest rates tend to encourage business spending.

Meanwhile, media reported yesterday that the company plans to cut 5% of its workforce, letting go of those deemed to be its lowest performers. Meta stock rose after it announced a big workforce reduction at the end of 2022, and investors appear to be hoping this next round of layoffs will also provide a bump to profits.

In addition, TikTok is set to be banned in the US on Sunday if it is not sold in a manner that meets the rules or the Supreme Court does not intervene. If a ban occurs, users can move to Meta’s platforms. Instagram and Facebook already compete directly with TikTok after Meta launched Reels, its short-form video product, years ago.

What’s next for Meta stock

In the internal memo revealing the layoffs, Zuckerberg reportedly said 2025 will be “an intense year,” hinting at possible new products or an aggressive ramp-up of existing products, which could be good news for the stock.

Expect Meta stock to continue moving higher on positive economic news, and a TikTok ban would be a clear gain for the stock.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister of Meta Platform CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jeremy Bowman holds positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a non-disclosure policy.