Meta Platforms Inc., formerly known as Facebook, experienced its largest single-day gain in almost a decade following CEO Mark Zuckerberg’s announcement to make the social media giant leaner, more efficient, and more decisive. The company is countering a slump in the industry with measures such as job cuts, increased use of AI to improve user engagement, and a focus on revenue from messaging products. In a call with investors, Zuckerberg stated that Meta is working to flatten its org structure and deploy AI tools to increase productivity, speed, and cost structure, with 2023 being the “Year of Efficiency.” Meta’s share surge was the biggest contributor to the Nasdaq 100’s rally, adding more than 10% to the benchmark’s climb.

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Meta is facing a decline in advertiser demand and a change in privacy rules on Apple’s iPhone, making it difficult to offer targeted ads. Digital ads make up the vast majority of its sales, primarily from clients in finance and technology. Despite ad sales slumping, the company recorded a total revenue of $32.2 billion, beating analysts’ estimates. Meta projects revenue of $26 billion to $28.5 billion for the first quarter. The company has also boosted its stock-buyback authorization by $40 billion, adding to the $10.9 billion remaining from previous repurchase programs.

In the call, Zuckerberg announced the company is using AI to improve the way it recommends content, making the platform more attractive to users and advertisers alike. Although the company has spent tens of billions of dollars on an effort to build the metaverse – a digital world where people can work and play, much of the investment is not leading to immediate returns. The company has stated that 2023 expenses will be $89 billion to $95 billion – less than Meta’s previous forecast, which may help ameliorate investor concerns that the company is overspending on its virtual-reality ambitions.

Snapchat owner Snap Inc., in contrast, saw a 10% plunge in its shares following its first-ever quarterly revenue drop. Snap CEO Evan Spiegel stated on a conference call that the ad slump appears to be bottoming out, but advertising demand has not improved significantly. The social media giant is betting that the Federal Reserve’s rate-hike cycle is nearing its end, causing investors to pile into growth stocks. As Meta’s flagship social network, Facebook, now has more than 2 billion daily users, up over 70 million from the previous year, analysts are predicting the company’s return to growth following the current period. Capital expenditures in the recent quarter have risen to $9.22 billion, while the fourth quarter of 2021 saw capital spending at $5.54 billion.