Mark ZuckerbergstartedMeta’s earnings call Wednesday by talking about artificial intelligence. Then he moved onto the metaverse, touting his company’s headsets, glasses and operating system. He spent almost the entirety of his opening remarks focused on the many ways Meta loses money.
Investors weren’t into it. Meta shares tumbled as much as 19% in extended trading on Wednesday, wiping out more than $200 billion in market cap. The drop came despite Metareporting better-than-expected profit and revenue for the first quarter. Shares opened more than 14% lower Thursday.
Zuckerberg appeared ready for the sell-off.
“I think it’s worth calling that out, that we’ve historically seen a lot of volatility in our stock during this phase of our product playbook where we’re investing in scaling a new product but aren’t yet monetizing it,” Zuckerberg said Wednesday. He cited past efforts like short-video service Reels, Stories and the transition to mobile.
Meta generates 98% of its revenue from digital advertising. But to the extent Zuckerberg talked about ads, he was looking to the future and the ways the company could potentially turn its current investments into ad dollars. In discussing Meta’s effort to build a “leading AI,” he said, “There are several ways to build a massive business here including scaling business messaging, introducing ads or paid content into AI interactions.”
He spent time talking about Meta Llama 3, the company’s newest large language model, and therecent rolloutof Meta AI, the company’s answer to OpenAI’s ChatGPT.
Zuckerberg then moved onto potential opportunities for expansion within the mixed reality headset market, like a headset for work or fitness. Metaopened up accessto the operating system that powers its Quest headsets on Monday, which Zuckerberg said will help the mixed reality ecosystem grow faster.
He also talked up Meta’s AR glasses, which he called “the ideal device for an AI assistant because you can let them see what you see and hear what you hear.”
In the meantime, Meta’sReality Labs unit, which houses the company’s hardware and software for development of the nascent metaverse, continues to bleed cash. Reality Labs reported sales of $440 million for the first quarter and $3.85 billion in losses. The division’s cumulative losses since the end of 2020 have topped $45 billion.
Zuckerberg has bought himself some time. Meta’s stock price almost tripled last year and, as of Wednesday’s close, was up 40% in 2024. It reached a record $527.34 in early April.
After abrutal 2022, during which the company lost about two-thirds of its value, Zuckerberg appears to have regained the confidence of Wall Street.
The driver for the rally has been a cost-cutting plan that the Meta CEO put in place early last year, when he told investors that 2023 would be the“year of efficiency.”The company slashed headcount and eliminated unnecessary projects in an effort to become a “stronger and more nimble organization.”
Zuckerberg said Wednesday that Meta will continue to operate efficiently, but that shifting existing resources to investments in AI will “grow our investment envelope meaningfully.”
Capital expenditures for 2024 are anticipated to be in the $35 billion to $40 billion range, an increase from a prior forecast of $30 billion to $37 billion “as we continue to accelerate our infrastructure investments to support our artificial intelligence (AI) roadmap,” Meta said.
Zuckerberg said he expects to see a “multiyear investment cycle” before Meta’s AI products will scale into profitable services, but noted that the company has a “strong track record” in that department.
Meta finance chief Susan Li echoed Zuckerberg’s remarks, saying the company needs to develop advanced models and scale products before they will drive meaningful revenue.
“While there is tremendous long-term potential, we’re just much earlier on the return curve,” Li said.
Even before the call began, investors were trimming their holdings. That’s because Meta issued a light revenue forecast for the second quarter, overshadowing the first-quarter beat.
As the stock plunge intensified, Zuckerberg told investors that if they’re willing to come along for the ride, they may well be rewarded.
“Historically, investing to build these new scaled experiences in our apps has been a very good long-term investment for us and for investors who stuck with us and the initial signs are quite positive here too,” Zuckerberg said.“But building a leading AI will also be a larger undertaking than the other experiences we’ve added to our apps and this is likely going to take several years.”
FAQs
Meta stock fell more than 10% Thursday, even as the Facebook parent company reported better-than-anticipated sales in its quarterly earnings the day before. The losses appeared to be driven by the company's steep Metaverse losses, and CEO Mark Zuckerberg's commitment to continue that spending.
How much did Meta lose in value? ›
Meta loses $200 billion in value as Zuckerberg focuses earnings call on all the ways company bleeds cash.
Is Mark Zuckerberg's religion? ›
In 2010, he said that he was going to give most of his money to charity. In 2010, he was also named Time's Person of the Year. He was raised Jewish, was an atheist, but thinks different about religion nowadays. In a public Facebook post, Zuckerberg launched the Internet.org project in late August 2013.
Who is the owner of Meta? ›
Mark Zuckerberg Founder, Chairman and Chief Executive Officer. Mark Zuckerberg is the founder, chairman and CEO of Meta, which he originally founded as Facebook in 2004. Mark is responsible for setting the overall direction and product strategy for the company.
Should I buy or sell Meta stock? ›
Meta Platforms has a conensus rating of Strong Buy which is based on 39 buy ratings, 3 hold ratings and 1 sell ratings. The average price target for Meta Platforms is $530.93. This is based on 43 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
Is Meta a good stock to buy now? ›
The financial health and growth prospects of META, demonstrate its potential to perform inline with the market. It currently has a Growth Score of A. Recent price changes and earnings estimate revisions indicate this would be a good stock for momentum investors with a Momentum Score of B.
Is Meta still losing money? ›
Meta shows no signs of substantially trimming its losses from investing in the metaverse, as competition heightens between the Facebook parent and Apple in the virtual reality market. In its first-quarter earnings report Wednesday, Meta disclosed that its Reality Labs unit recorded a $3.85 billion operating loss.
Has Meta ever made a profit? ›
Facebook and Instagram parent company Meta said Wednesday its first-quarter profit more than doubled, boosted by higher advertising revenue and a 6% increase on the average price of ads on its platforms. But its shares dropped sharply in after-hours trading following lukewarm revenue guidance.
Does Meta have a lot of debt? ›
What Is Meta Platforms's Net Debt? You can click the graphic below for the historical numbers, but it shows that as of December 2023 Meta Platforms had US$18.4b of debt, an increase on US$9.92b, over one year.
What's Mark Zuckerberg's IQ? ›
Einstein IQ: 160+, Bill Gates IQ: 150+, Elon Musk IQ: 155, Zuckerberg IQ: 152, Sunny Doel's IQ: over 160.
"As part of our efforts to make Facebook easier to navigate and use, we're removing a handful of profile fields: Interested In, Religious Views, Political Views, and Address," a Meta representative said on Thursday.
What religion is Mark Wahlberg? ›
He issued an apology after family members of those killed on the flight expressed outrage. Wahlberg is Catholic, and has described his religion as "the most important part" of his life; he goes to Mass twice on Sundays. He fervently supports same-sex marriage despite the Church's opposition.
Is Meta owned by China? ›
Meta Platforms, Inc., doing business as Meta, and formerly named Facebook, Inc., and TheFacebook, Inc., is an American multinational technology conglomerate based in Menlo Park, California. The company owns and operates Facebook, Instagram, Threads, and WhatsApp, among other products and services.
Who owns the most stock in Meta? ›
What percentage of Meta Platforms (META) stock is held by retail investors? According to the latest TipRanks data, approximately 34.52% of Meta Platforms (META) stock is held by retail investors. Vanguard owns the most shares of Meta Platforms (META).
Will Meta stock ever go up? ›
The social media giant has tremendous positive momentum as it looks to integrate artificial intelligence technology into its social media platforms. After a big 2023 rally and a huge earnings beat in the fourth quarter, Meta is again making new all-time highs, smashing over $500 per share in March 2024.
What is the Meta stock price prediction for 2024? ›
According to our current META stock forecast, the value of Meta shares will rise by 8.86% and reach $ 509.46 per share by May 19, 2024. Per our technical indicators, the current sentiment is Neutral while the Fear & Greed Index is showing 39 (Fear).
Is Meta overvalued? ›
With its 2-star rating, we believe Meta's stock is overvalued compared with our fair value estimate of $400 per share, representing an enterprise value of 11 times our 2024 adjusted EBITDA projection.
What does Mark Zuckerberg own? ›
Mark Zuckerberg launched Facebook in 2004 and took the company public in 2012. In November 2021, Facebook changed its name to Meta Platforms, Inc. The company owns Instagram, its flagship Facebook brand, Threads, WhatsApp and Oculus.
