News
Meta Stock Drops After Disappointing Q2 Outlook
Goal (GOAL) reported its first-quarter earnings on Wednesday, and while it beat analysts’ expectations on the top and bottom lines, a disappointing second-quarter forecast sent shares of the social media giant plunging as much as 14% in early trading Thursday. -fair.
Meta says it will see second-quarter revenue of between $36.5 billion and $39 billion, falling short of average estimates of $38.24 billion.
In addition to the pessimistic second-quarter forecast, Meta’s CFO, Susan Li, raised the company’s total expense estimate for the full year from a range of between $94 billion and $99 billion to between $96 billion and $ 99 billion due to higher infrastructure and legal costs.
In the company’s earnings call, CEO Mark Zuckerberg he said“As we increase capital and energy expenditures for AI, we will continue to focus on operating the rest of our company efficiently. But realistically, even as we shift many of our existing resources to focus on AI, we will still increase our investment envelope significantly before we get a lot of revenue from some of these new products.”
Li said Meta also continues to expect its Reality Labs division to report higher operating losses year over year as the company builds out its various AI, AR and VR efforts.
“While we do not provide guidance for years beyond 2024, we expect capital expenditures to continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts,” Li said in a statement. .
Meta reported earnings per share of $4.71 in the quarter with revenue of US$36.46 billion. Wall Street was forecasting earnings per share of $4.30 and revenue of $36.12 billion, according to analyst estimates compiled by Bloomberg.
The target stock was on the rise, rising 131% in the last 12 months and more than 39% year-to-date. This is much better than main rival Google (GOOG, Google) which increased by 50% in the last 12 months and 13% year to date.
While part of Meta’s stock performance has to do with a rebound in the digital advertising market, the company’s stock price also soared last quarter after the social media company announced it was initiating a $0 dividend. 50 per share and increased its share repurchase authorization by $50 billion. .
The company did not announce any updates to its shareholder return initiatives on Wednesday.
Meta has made a series of announcements about its AI efforts in recent months, including the debut of its Meta AI Chatbot It is Large Llama 3 Language Model on April 18th.
The chatbot, however, has already sparked controversy after it joined a private Facebook group for mothers in Manhattan and claimed to have its own child, 404 Media reported.
The story continues
On the metaverse front, CEO Mark Zuckerberg announced on Monday that Meta will make its Horizon operating system for headsets open source, allowing third-party companies like Lenovo and Microsoft to use it to build their own devices using the software. The idea is to bring more headsets to the market while increasing Meta’s reach in the AR/VR space.
The company will also benefit significantly if Congress’s ban on TikTok, which President Biden signed into law on Wednesday, survives legal challenges. If the app is blocked in the US, it stands to reason that users and creators will turn to rival platforms like Instagram to scratch their social media itch.
Subscribe to the Yahoo Finance Tech newsletter. (Yahoo Finance)
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
Read the latest financial and business news from Yahoo Finance