Meta Platforms’ stock is approaching the $1 trillion mark after its stock price has increased by as much as 200% in 2023.

Meta’s market capitalization is currently $966.60 billion, which means the company is just shy of the $1 trillion mark – the dream capitalization of many companies is $33.4 billion.

If Meta hits $1 trillion, it will join the ranks of Big Tech peers like Microsoft, Apple, Alphabet, Amazon and Nvidia, all of which are currently valued at $1 trillion or more. Microsoft is currently leading with a market capitalization of $2.93 trillion.

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In fact, Meta previously reached a capitalization of $1,000 billion. The last time the tech giant crossed the $1 trillion mark was in June 2021. The stock reached its all-time high closing valuation of $1.08 trillion on September 7 of the same year, according to Dow Jones Market Data.

However, like many other tech companies, Meta faces stiff challenges after demand for tech products and services slumped as Covid-related travel restrictions were eased .

In February 2022, Meta suffered the largest single-day capitalization loss in US corporate history after reporting fourth-quarter earnings that showed Facebook’s daily active user base for the first time. The fairy is narrowed.

To cut costs, Meta laid off 11,000 people in November 2022 in the company’s first major layoff ever. Company leaders also promised that 2023 will be a “productive year”. And sure enough, the efforts seem to have paid off. In the third quarter of 2023, Meta reported strong profits that beat analysts’ estimates.

Meta’s shares have surged nearly 200% in 2023, making it the second-best performer on the S&P 500 behind chipmaker Nvidia.

Meta shares closed 2.1% higher at $376.13 per share on Thursday. According to MarketWatch calculations, they would need to close at $389.13 for the company’s market capitalization to reach the trillion-dollar mark.

Meta’s soaring stock price has further boosted the wealth of co-founder and CEO Mark Zuckerberg, who now holds a 13% stake in the company. He is currently the world’s 6th richest person with a net worth of $136 billion after starting 2023 with only $48 billion, according to the Bloomberg Billionaires Index.

So what changed Meta’s fortunes?

Productive Year: Meta has cut back on everything this year, opting for austerity rather than spending for an illusory future in the metaverse. Of course, Wall Street has shown its approval by continuously pushing the company’s stock price up.

The company laid off more than 20,000 employees in four rounds of layoffs starting late last year.

Meta said the layoffs are all aimed at achieving a “productive year” goal, as the company tries to recover from continued revenue declines, increased competition, concerns about user growth and Huge losses with Reality Labs division. Zuckerberg was also responsible for over-hiring earlier during the pandemic, when demand for the company’s products and online advertising surged, but this demand has since subsided somewhat. when the world reopens.

The company has also worked to stabilize its cash flow this year (the amount of money a company has left after covering operating and investment expenses, a good indicator of a company’s financial health) by eliminating a significant number of its AI projects. That cash flow fell to a recent low of $173 million last fall. But as of last quarter, this number had increased to $13.64 billion, a pretty impressive change.

That’s also good news for shareholders. Meta spent about $3.7 billion on stock buybacks in the third quarter alone.

A friendly economy: At the same time Meta is tightening its belt, the company is also being supported by a rebound in the advertising market, as companies realize their dire predictions about the economy America is unlikely to come true. The Federal Reserve has stopped raising interest rates and consumers continue to spend.

Advertising revenue has rebounded significantly for the company after a sharp decline in 2022. Meta’s ad views increased 31% in the third quarter from a year earlier. The company saw its average price per ad drop 6%, but that was its slowest decline in nearly two years.

The company has also been successful in adding users, monetizing Instagram’s video feature and successfully launching Threads, in direct competition with X. Threads will launch in the EU next week.

What the future holds: The question is whether Meta can continue to shine on Wall Street even after the austerity program ends?

Zuckerberg announced during its third-quarter earnings call this fall that it would spend more next year than Wall Street analysts had previously predicted, by hiring more and refocus on expanding into AI. The company also warned that the ongoing conflict in Israel and Gaza could impact fourth-quarter revenue.

Momentum also appears to be waning: Shares have fallen about 1.2% in the last month, while the rest of the market has been steadily rising.

But not all analysts think this is the end of Meta’s bull run. Bank of America still gives this stock a “buy” rating.

“AI-driven innovation at Meta will lead to new user experiences and recurring revenue models,” BofA analyst Jason Post wrote in a recent note. “We think AI assets of Meta is undervalued in its stock price”.

While Zuckerberg’s announcement of more hiring by 2024 may have some worried about rising costs, the message is clear. Meta still plans to grow but at a much more manageable pace, KeyBanc analyst Justin Patterson wrote in a note.

Both analysts increased their price targets for Meta stock for the year ahead.