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Meta stock closes higher amid Morgan Stanley upgrade, layoffs

Meta shares rise Tuesday after Morgan Stanley analyst Brian Nowak upgraded the stock to a Buy from a Hold.

Video transcript

SEANA SMITH: All right, our trending ticker today is Meta, and that's moving on an upgrade from Morgan Stanley. The bank raising its rating on the stock to overweight, lifting its price target to 250 bucks a share. Morgan Stanley giving a number of reasons to back its bullish view. Now, among them, they're talking about Meta's pivot towards efficiency. They also talked about the improving revenue engagement in Reels trends that we are starting to see within Meta.

But this pivot towards efficiency, Dave, has certainly resonated with Wall Street. We've seen Meta conduct two rounds of significant layoffs going back to November of last year, when they cut 11,000 jobs. They just announced another round of 10,000 jobs that were cut just last week. So Morgan Stanley, the latest analyst to come out in favor of Meta really, I should say, seeing upside here in the name.

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DAVE BRIGGS: Yeah, what was nice about this note is it certainly was excited about the year of efficiencies and the cuts. But it also talked, to your point, about growth, about Reels, about monetization, about engagement. And those are the things that you really have been longing to hear from Meta. Also talking about one of 11 companies they see as most poised to take advantage of the AI boom, which is something you also want to hear with Meta. And one more thing that I really liked if you're an investor is that if the consumer weakens, they feel Meta is better positioned than Google or Amazon. So there's a lot to like on this note regarding Meta. It's very widespread.

SEANA SMITH: Yeah, that was interesting to me just in terms of the comparisons there when it comes to ad growth with Meta between-- comparing Meta to Google to Amazon. And the comparison to Google, so they're saying that Google hasn't reduced costs as aggressively as Meta has. Amazon, on the other hand, the macro uncertainty could push out AWS, the growth improvements there.

Of course, we were talking about AWS's slowing growth with our analyst yesterday, Tom Forte of DA Davidson. And he was highlighting the fact that, hey, if they're cutting from those type of areas when it comes to Amazon's layoffs, could spell a little bit of turbulence maybe for the stock over the coming quarters.

DAVE BRIGGS: One thing I was really surprised to not see in that note was that the potential for a TikTok ban because many feel that could be a huge catalyst for Meta.