Meta Platforms, trading under the ticker META, is confronting market challenges as it embarks on a significant workforce reduction within its Reality Labs unit, a division central to its virtual reality ambitions. The company confirmed that about 10% of the approximately 15,000 employees in Reality Labs will be laid off beginning Tuesday, marking a critical restructuring effort within the tech giant.
The Reality Labs division, tasked with products such as VR headsets and social networks operating in virtual reality environments, has been a substantial investment for Meta. However, this recent wave of job cuts signals a strategic shift away from some of these efforts toward a heightening focus on artificial intelligence technologies.
Meta’s AI development primarily occurs in its Superintelligence Labs division. This segment also faced workforce reductions last year as the company streamlined its innovation teams to accommodate new strategic hires, including notable talent such as Alexandr Wang, the founder of ScaleAI. This restructuring points toward prioritizing AI capabilities as a critical driver of future growth for Meta.
Reinforcing its AI ambitions, Meta recently finalized agreements with three nuclear power operators to provide energy to data centers located in Ohio, highlighting a move toward sustainable infrastructure to support its computing demands. Additionally, the acquisition of Manis, a company based in Singapore specializing in AI agent technology, further underscores Meta’s commitment to integrating advanced AI solutions into its ecosystem.
Market dynamics have reflected investor caution as Meta's stock price experiences downward momentum. The shares are trading below critical short- and medium-term moving averages: 4.5% under the 20-day simple moving average (SMA) and 2.2% under the 50-day SMA. More broadly, the stock remains well below the 100-day and 200-day SMAs, technical indicators often used by market participants to assess underlying trends.
The relative strength index (RSI) is positioned at 42.06, a figure within neutral territory. This suggests the stock currently neither exhibits pronounced buying momentum nor significant selling pressure, implying the potential for price fluctuation in either direction depending on upcoming developments. Concurrently, the Moving Average Convergence Divergence (MACD) indicator is situated below its signal line, affirming the short-term bearish sentiment surrounding the stock.
Analysts are watching key price levels closely, with decisive support identified at $581.50 and resistance around $673.50. Price action near these levels may reveal the strength of market demand or supply, potentially indicating whether the stock will reverse its current trend or continue on its present trajectory.
Of particular note was the formation of a "death cross" in December, a event where the 50-day SMA drops below the 200-day SMA, frequently interpreted by traders as a signal of a longer-term bearish trend. Despite these concerning signals, over the past 12 months, META stock has managed to post a modest advance of 3.08%, reflecting some underlying resilience amid periods of volatility.
At the time of reporting, Meta’s share price had declined by 2.31% to $627.15. This drop highlights the immediate market reaction following news of workforce reductions and anticipated shifts in business priorities.
Meta’s recent developments underscore the broader transformation within the company as it reallocates resources toward artificial intelligence, possibly at the expense of its virtual and augmented reality ambitions. While this reorientation might better position the firm for future technological trends, the market’s current stance suggests investors remain wary about the near-term impacts on performance and stock valuation.