Meta Platforms shares fell more than 15% in after-hours trading, wiping billions of dollars off its market value, even as the social media group reported better-than-estimated revenue in the first three months of 2024.
In detail, the parent company of Facebook, Instagram and WhatsApp declared a earning per share at $4.71 per share versus the $4.32 per share expected by LSEG and revenues at $36.46 billion versus the $36.16 billion expected.
Revenue increased 27% from $28.65 billion in the same period a year earlier, the fastest rate of expansion for any quarter since 2021. Net income more than doubled to $12.37 billion , or $4.71 per share, up from $5.71 billion, or $2.20 per share, a year ago.
One reason net profit increased is that, amid accelerating revenue growth, sales and marketing costs fell 16% compared to the prior period.
Meta said it expects second-quarter revenue of between $36.5 billion and $39 billion. The midpoint of the range, $37.75 billion, would represent 18% growth over the previous year and is lower than analysts’ average estimate of $38.3 billion.
Stock collapses on the stock market. Here because
But despite the good quarterly results, Meta’s stock collapsed on the stock market. The sell-off in stocks accelerated at the start of the call after the CEO Mark Zuckerberg he launched into a discussion about investing, particularly in areas like glasses and augmented reality where the company doesn’t currently make money. And he said investment in artificial intelligence will increase.
Specifically, Meta, whose family of apps also includes Instagram and WhatsApp, raised its annual capital spending forecast to $40 billion from $37 billion, citing a desire to “accelerate” its ongoing push to expand its capabilities. of artificial intelligence. Last year Meta spent $28.1 billion. Zuckerberg, who had previously backed tough cost-cutting measures for much of 2023, said the increased investments were needed to help Meta become “the world’s leading artificial intelligence company.”
“Such a statement translates into a slight reduction in revenue trends,” Goldman Sachs analysts said in a note to clients.
And investors didn’t like it. Meta shares plunged 19% in after-hours trading yesterday, wiping out more than $200 billion in market value.
“I think it’s worth remembering that historically we’ve seen strong volatility in our stock during this phase of our product playbook, where we’re investing in the development of a new product but we’re not yet monetizing it,” Zuckerberg said, citing initiatives past like the short video service Reels, Stories and the transition to mobile.
