Meta Platforms Inc (NASDAQ:META) stock plunges 12.07% (As on April 25, 11:06:24 AM UTC-4, Source: Google Finance) after the company forecast weaker-than-expected sales in the current quarter while targeting higher capital expenditures. Mark Zuckerberg said his main focus for the rest of 2024 and likely 2025 will be “getting millions or billions of people to use Meta AI” rather than generating revenue from it. He cautioned that Meta products such Instagram Reels have in the past not immediately generated revenue as they scaled before they became profitable pieces of Meta’s ad business. Last week, the company announced it would integrate its partially released Llama 3 large language model across its platforms. The Meta AI assistant will also roll out to Australia, Canada, Singapore, Nigeria and Pakistan. The company also said it would add real-time image generation to its social networks.
META in the first quarter of FY 24 has reported the adjusted earnings per share of $4.71, beating the analysts’ estimates for the adjusted earnings per share of $4.32. The company had reported the adjusted revenue growth of 27 percent to $36.46 billion in the first quarter of FY 24, beating the analysts’ estimates for revenue of $36.16 billion. The company’s Reality Labs division, oriented towards the metaverse, fell short of expectations in the first quarter, recording sales of $440 million. While this represented a 30 per cent increase year-on-year, it failed to meet the anticipated revenue of $475 million. The company’s daily active people (DAP) metric, used to track unique users across its apps, grew by 7 per cent, slightly lower than the 8 per cent growth recorded in the preceding quarter.
Meta also now expects its capital expenditure to be between $30bn and $40bn this year, up from an earlier forecast of between $35bn and $37bn.
The company disclosed its revenue forecast for the April-June quarter, estimating it to range between $36.5 billion and $39 billion, with a midpoint of $37.8 billion. However, these figures fell short of analysts’ projections, which averaged at $38.3 billion.
Meta attributed the anticipated increase in expenses to support investments in new AI products and the requisite computing infrastructure. Further, it indicated a continued upward trajectory in spending into the next fiscal year, with the total expense forecast for 2024 raised to $96 billion-$99 billion.
Additionally, Meta stands to potentially benefit from regulatory pressures on its competitor TikTok, which faces the prospect of a US ban.