META SHARE PRICE PLUNGES 15% ON HIGHER AI SPENDING, WEAK REVENUE GUIDANCE; MARKET VALUE FALLS BY NEARLY $200 BILLION
Meta Platforms share price declined 15% in extended trade after the company disappointed investors with forecasts of higher expenses and lighter-than-expected revenue.
This was Meta shares’ second highest one-day loss in stock value after the $232 billion loss suffered on February 3, 2022, which was the record one-day loss of market capitalization for any US company.
The Facebook and Instagram parent Meta expects its April-June revenue in the range of $36.5 billion-$39 billion, with a midpoint of $37.8 billion, lower than analysts’ estimates of $38.3 billion, according to LSEG data, Reuters reported.
The company raised its forecast for expenses this year to support investments in new AI products and the computing infrastructure needed to support them. The company said that the expected spending would continue to increase next year.
Meta raised its 2024 total expense forecast to $96 billion - $99 billion, from $94 billion - $99 billion. It also expects 2024 capital expenditure to fall within a range of $30 billion - $40 billion, up from its earlier forecast of $35 billion - $37 billion, the Reuters report said.
In its conference call, Meta CEO Mark Zuckerberg told analysts that the focus on AI would “grow our investment envelope meaningfully before we make much revenue from some of these new products.”
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Meta Q1 results
Meta reported revenue rose 27% to $36.5 billion in the first quarter ended March 2024 from $28.65 billion the year ago, roughly in line with expectations of $36.2 billion, according to LSEG data.
The company more than doubled its profit for the January-March period, with earnings reaching $12.37 billion, or $4.71 per share, up from $5.71 billion, or $2.20 per share, in the same period last year.
Meta’s daily active people (DAP), a metric it uses to track unique users of any one of its apps Facebook, Instagram, Messenger or WhatsApp in a day, grew 7% as against 8% in the preceding quarter.
The company provided revenue guidance for the current quarter, expecting it to range between $36.5 - 39 billion, surpassing analyst expectations of $38.25 billion for the second quarter.
(With inputs from Reuters)
2024-04-25T02:35:40Z dg43tfdfdgfd