The owner of Facebook and Instagram beat analysts' expectations for revenue and profits. The share continues to decline after somewhat disappointing guidance.
Meta was expected to continue to deliver strong revenue growth in the first quarter of 2024, and nearly double earnings from the same time last year. This is after the strong results for the end of 2023.
The tech giant has exceeded expectations on both the bottom line and the top line.
- Meta's total revenue was $36.46 billion in the quarter. Upfront, analysts had $36.12 billion, according to estimates obtained by Bloomberg.
- Earnings per share were $4.71, versus expectations of $4.30.
- In total, the after-tax result was $12.37 billion. This is more than double from the previous year.
However, Meta shares were down 12.3 per cent in post-market trade at 10.50pm on Wednesday.
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Meta announces that it expects revenue between 36.5 and 39 billion in the second quarter. Analysts' estimate for the guidance was at the high end at $38.24 billion, and many media outlets highlighted the guidance as disappointing.
Almost all of Meta's revenue comes from advertising associated with the company's apps. This includes Facebook and Instagram, as well as other apps like WhatsApp and Threads. The tech giant has more than 2 billion daily active users.
It will increase investments in artificial intelligence
Updates regarding investing in AI are something that is closely followed when it comes to Meta.
In the previous issue's release, Meta CEO Mark Zuckerberg linked improvements in the advertising division to the development of artificial intelligence, and emphasized AI in updates on future investment plans.
– It's been a good start to the year, Zuckerberg says this time.
– The new release of Meta AI with Llama 3 is a new step towards building the world's leading AI. We are seeing healthy growth across our apps and continue to make steady progress in building the metaverse.
Meta raised its investment expectations in 2024 to $35-40 billion, from $30-37 billion previously.
The company explains that it “continues to ramp up infrastructure investments to support our AI roadmap.” Investments are expected to continue to increase in the coming years to focus on AI research and product development, Meta wrote.
Reality Labs, the Meta project in the Metaverse, continues to lose significant amounts. In the first quarter, operating profit for this business was minus $3.85 billion. It's a smaller loss than expected.
Long stocks rise
When Meta last reported its results in February, after the fourth quarter of last year, it beat expectations in terms of sales volume and profits. The company also announced that it would pay a dividend for the first time and buy back $50 billion worth of stock.
The stock made a jump after that, and rose somewhat more in the months that followed.
Meta share has risen considerably over the past year and a half, until today's cold shower in the aftermarket. Before today's figures were released, the share had risen by 39 percent since the new year.
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