But Meta’s
META,
+23.28%
management sounded more disciplined on the company’s fourth-quarter earnings call Wednesday, and the stock enjoyed a big move higher.

Shares of Facebook’s parent company closed up 23.3% in Thursday trading to stage their second-largest one-day percentage rally on record, and their best performance since July 25, 2013, according to Dow Jones Market Data.

On that day in July 2013, Meta had a market value of just $83.7 billion, according to Dow Jones Market Data. The company added more than that — $92.4 billion — to its market value in Thursday’s session alone. Meta did fall short of adding $100 billion in market cap to its total for the first time on record, despite being on track to do so for part of the trading day.

See more: Meta stock spikes nearly 20% as cost cuts and $40 billion for investors overshadow earnings miss

“With the new efficiency mentality, the stock is now positioned for leverage/EPS upside as the ad environment improves,” wrote Bank of America’s Justin Post, who upgraded the stock to buy from hold following the report, while increasing his price objective to $200 from $160.

Meta’s fourth-quarter revenue marginally exceeded the consensus view, and the company showed “mixed” profitability in the latest quarter amid a restructuring. “But none of this matters” now that Meta “meaningfully” lowered its capital-expense and operating-expense forecasts, “yielding a sharp reset higher to FCF [free-cash-flow] expectations,” said Piper Sandler analyst Thomas Champion.

Executives at Meta said they anticipated $30 billion to $33 billion in capital expenditures for the full year, down from a prior forecast of $34 billion to $37 billion. They also forecast $89 billion to $95 billion in total expenses, whereas their earlier outlook was for $94 billion to $100 billion.

“Despite a strong run off the lows a quarter ago, we acknowledge the change in tone and magnitude of our forecast change,” Champion wrote, while upgrading Meta’s stock to overweight from neutral and boosting his price target to $215 from $136.

“Also, we still see room for upside,” he added. “It would not shock us to see further optimizing. The macro is still difficult, but we are *slightly* raising estimates for the first time since 2021. We can overlook the gaudy metaverse investment in this new light.”

MoffettNathanson’s Michael Nathanson was even more colorful in describing the company’s metaverse efforts, which sit within its Reality Labs unit.

On the call three months back, “management seemed to misunderstand that the bloated core cost structure over the 2020 to 2022 period was no longer easily covered up by faster-growing top line,” he wrote Thursday.

Then there was also “Reality Labs — a money pit of a magnitude rivaling any in American corporate history; a use of money seemingly so irresponsible it threw into question whether the company’s chief executive truly even cared about the value of the business he built or the wealth he had created since the early days of that dorm room in Harvard.”

The latest call, however, indicated that Zuckerberg “is a capitalist after all,” one who “cares about shareholder value” and market perception, to the point where he dubbed 2023 Meta’s “year of efficiency.”

“While we all know how rarely New Year’s resolutions graduate into reality, the CEO of a highly scrutinized publicly traded company like Meta cannot make such a proclamation without a real commitment to actualization,” Nathanson wrote, while keeping an outperform rating on Meta’s stock and upping his price target to $255 from $220.

He added that while he would want to see Reality Labs be “part of that trimming,” Meta “is in extremely solid shape even with that black hole growing throughout the year.”

Opinion: Zuckerberg and Intel are shipping the proceeds from their layoffs straight to Wall Street

RBC Capital Markets analyst Brad Erickson also keyed in on Meta’s greater focus on expense discipline in a note to clients titled, “Mark to Market: You’re welcome.”

“Investors’ No. 1 concern coming in was whether management would reduce opex/capex and boy did META deliver,” he wrote.

Meta remained his favorite large-cap name this year, as he noted that “incremental [revenue] in front of conversion improvements is a key source of upside and the newfound cost discipline invites cash flow-sensitive investors back into a story that is shedding significant overhangs of the past 18 months.”

Still, he acknowledged that bears may quibble with the new attitude on spending. “Given the meteoric capex narrative change vs. 90 days ago we do have to wonder to some degree if META has delayed some of the more compute-intensive investments that are need to further their AI rollout,” Erickson wrote.

He rated the stock at outperform and upped his price target to $225 from $160 Thursday.

See also: Too little, too late? Snap stock plunges as turnaround remains a work in progress

Of course, expenses aren’t the whole story for Meta, which still must contend with a shakier economic landscape, competitive challenges, and the fallout of Apple Inc.’s
AAPL,
+3.71%
privacy-related moves.

“Dramatics aside, 2022 was a challenging year for believers in the House of Zuck, with many pushed to the brink or throwing in the towel culminating in the capitulation we saw last quarter,” wrote Bernstein analyst Mark Shmulik. “But it appears that Meta has found their own religion on efficiency/profitability and investors now find a leaner, sharper company before them. But is it a growth company?”

He noted that while Meta’s core revenue showed progress, the company is “not quite out of the woods,” given a 4% decline on the top line relative to a year before.

The quarter brought a “sigh of relief, but we need growth to return for the story to work from here,” he continued.

Shmulik had an outperform rating on Meta’s stock, and he upped his price target to $210 from $170.