(BFM Bourse) – The parent company of Facebook and Instagram delivered lower-than-expected revenue prospects for the second quarter and announced an increase in its investments to support its strategy in artificial intelligence. Its stock is plummeting on Wall Street.
Meta is set to wipe out between $150 billion and $200 billion in market capitalization in one session. The action of the parent company of Facebook and Instagram collapsed by 15% in post-market trading on Wall Street, following the publication of its first quarter accounts, opening the results show in a very bad way. Gafam.
Over the first three months of the year, the company saw its revenues jump 27% to $36.46 billion for a net profit of $12.37 billion (+117% year-on-year). Its net profit per share thus more than doubled (+114%) to amount to 4.71 dollars per share.
Which is enough to exceed consensus expectations of $36.16 billion for revenue and $4.32 for earnings per share, according to CNBC.
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Revenue forecast lower than expected
“Although these performances slightly exceeded analysts’ expectations, investors’ attention was focused on the forecasts, demonstrating that the market is a machine perpetually focused on the future. Unfortunately, the forecasts cooled investors, which which led to a decline in the entire market,” observes Stephen Innes of Spi Asset Management.
Meta said it expects second-quarter revenue of between $36.5 billion and $39 billion. However, according to Bloomberg, the middle of this range is lower than analysts’ consensus for the period.
In addition, the group also announced an upward revision of its investment spending for 2024, now counting on a range between 35 billion and 40 billion dollars, compared to 30 billion to 37 billion previously. Meta justifies this increase by the need to invest in the infrastructure necessary for its roadmap in artificial intelligence (AI).
“While we are not providing forecasts for years beyond 2024, we expect capital spending to continue to increase next year as we invest heavily to support our ambitious research and development efforts. product development in the field of AI,” Meta also said.
The recall of bad memories
“We have become more optimistic and ambitious on AI,” Chief Executive Mark Zuckerberg told analysts, as quoted by Bloomberg. “We have reached a point where we have shown that we can build cutting-edge models and become the world’s leading AI company. This opens the door to many more opportunities beyond the most obvious ones for us,” he added.
But its costly ambitions worry the market which had already had similar doubts during the turn taken by the group in the metaverse which cost it more than 45 billion dollars in total, according to CNBC, for a return on investment that is difficult to perceive. .
“Meta’s announcement that capital spending would exceed initial expectations and that revenue forecasts would be slightly below consensus helped worry investors about the company’s future performance. This discrepancy signaled potential challenges to coming, prompting investors to re-evaluate Meta’s growth trajectory and general prospects,” analyzes Stephen Innes.
“Despite its bold AI plans, Meta cannot afford to lose sight of the core of its business, namely its core advertising business,” Sophie Lund-Yates, an analyst at Hargreaves Lansdown, said in a statement. memo dated Wednesday and cited by Bloomberg. “This does not mean that AI should be ignored, but that spending should be targeted and aligned with a clear strategic vision,” she adds.
Julien Marion – ©2024 BFM Bourse
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