Tech
Meta Stock Plummets 15% after Disappointing Q2 Forecast
(CTN News) – Meta Stock posted first-quarter profits on Wednesday, beating analysts’ forecasts on both the top and bottom lines. However, a poor Q2 projection saw shares of the social media company tumble by over 15%.
Meta Stock expects second-quarter revenue between $36.5 billion and $39 billion, which is below the consensus forecast of $38.24 billion.
In addition to the dismal Q2 forecast, Meta CFO Susan Li increased the company’s full-year total expenses estimate from $94 billion—$99 billion to $96 billion—$99 billion due to greater infrastructure and legal costs.
CEO Mark Zuckerberg stated during the business’s earnings call, “As we scale capex and energy expenses for AI, we will continue to focus on operating the rest of our company efficiently.”
But, realistically, even after transferring our existing resources to focus on AI, we’ll still need to expand our investment envelope significantly before we see much income from some of these new products.”
Li also stated that Meta expects its Reality Labs segment to record significant year-over-year operating losses as it expands its AI, AR, and VR activities.
“While we are not providing guidance for years beyond 2024, we expect capital expenditures will continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts,” Li stated in a press release.
Meta Stock earned $4.71 profits per share on $36.46 billion in revenue for the quarter. According to Bloomberg analysts, Wall Street expected an EPS of $4.30 and a revenue of $36.12 billion.
Meta stock has risen 131% in the past year and more than 39% year-to-date. This outperforms its main competition, Google (GOOG,GOOGL), which has increased by 50% in the past year and 13% overall.
While a recovery in the digital advertising market has contributed to Meta’s stock performance, the stock price skyrocketed last quarter after the social media company announced it would initiate a $0.50 per share dividend and increase its stock buyback authorization by $50 billion.
On Wednesday, the business made no announcements on its shareholder return objectives.
Meta has recently announced its AI efforts, including the launch of the Meta AI chatbot and Llama 3 big language model on April 18.
However, 404 Media said the chatbot has already sparked criticism after joining a private Facebook group for mothers in Manhattan and claiming to have its own child.
On the metaverse front, CEO Mark Zuckerberg stated on Monday that Meta would open-source its Horizon operating system for headgear, allowing third-party firms such as Lenovo and Microsoft to build their own devices based on the software. The goal is to bring more headsets to market while also expanding Meta Stock ‘s presence in the AR/VR arena.
The corporation will also benefit greatly if Congress’ TikTok prohibition, which President Biden signed into law on Wednesday, survives legal challenges. If the app is unavailable in the United States, it stands to reason that users and producers will resort to alternative platforms such as Instagram to satisfy their social networking needs.
