Meta shares surged by $100bn (£75bn) as investors cheered plans for Mark Zuckerberg to rein in spending at his struggling “Metaverse” unit.
Mr Zuckerberg is plotting steep budget cuts as high as 30pc at the division, which has been developing virtual reality (VR) gadgets and games, according to reports.
The Metaverse project has divided Wall Street, with some shareholders concerned about the costs involved. Meta’s virtual reality efforts have lost at least $70bn since 2020, with $4.4bn of this occurring in the most recent quarter.
In a sign of the unease, on Thursday, Meta shares surged the most since July on Mr Zuckerberg’s spending cuts plan. They rose by 5.5pc, adding $93bn to the company’s value.
The budget cuts are likely to lead to job losses within the division, which could come as soon as January, Bloomberg reported.
The cuts were discussed at a meeting with senior Meta leaders at Mr Zuckerberg’s compound in Hawaii last month, according to the report.
Mr Zuckerberg rebranded Facebook as Meta in 2021, launching a spending spree on so-called “Metaverse” technology.
The innovation promised a kind of 3D internet that meshes with the real world.
Meta promised a virtual equivalent of social media, launching a game called Horizon Worlds where players roam as 3D avatars that can mimic their hand movements and speech.
It also launched services intended to embrace VR education and workplace meetings.
However, the technology has largely been a flop.
Sales of VR headsets have remained a niche pursuit among tech fans. Few people have been willing to spend significant amounts of time inside virtual worlds while wearing headsets, which in some cases can cause nausea.
Mr Zuckerberg has quietly stopped mentioning the Metaverse in his public appearances and Instagram videos, instead promoting Meta’s efforts in artificial intelligence (AI).
The billionaire has sought to recover lost ground in a race against OpenAI, the developer of ChatGPT, launching AI chatbots and video generation apps.
Users can interact with Meta AI, its digital bot, in apps including Instagram and WhatsApp.
He has also pledged to invest $600bn in data centres across the US by 2028 as the company seeks to build ever more powerful AI software.
The company’s spending spree has helped fuel fears of a bubble in AI stocks as technology giants plough trillions of dollars into data centre infrastructure in a push to lead the AI race.