Meta Platforms Stock Value Decline
Meta Platforms, the parent company of Facebook and Instagram, faced a downturn in its stock value on Wednesday as it revealed projections of increased expenses and revenue figures below market expectations.
Market Capitalisation Loss
- The announcement led to a loss of about $200 billion in Meta’s market capitalisation.
- Shares fell by approximately 15% in after-hours trading.
Market Performance
This decline saw Meta’s market cap plummet to around $1 trillion, marking one of the most significant single-day losses in market value for a US company.
The drop was slightly away from the record set on February 3, 2022, when Meta suffered a $232 billion one-day loss.
Industry Impact
Meta’s discouraging performance affected the tech industry, with shares of Alphabet and Microsoft also experiencing declines in extended trade.
Investor Concerns
- Investors are worried that the growing costs in artificial intelligence (AI) might outweigh the benefits for tech giants.
- Concerns arise ahead of Alphabet and Microsoft’s financial reports scheduled for Thursday.
Revenue Forecast
Meta disclosed a revenue forecast for the April-June quarter, estimating it to range between $36.5 billion and $39 billion, falling short of analysts’ projections.
Expense Increase
- Meta attributed the rise in expenses to investments in new AI products and computing infrastructure.
- Total expense forecast for 2024 raised to $96 billion-$99 billion.
CEO’s Perspective
CEO Mark Zuckerberg highlighted the company’s investment in AI and the expected revenue generation from new products.
Reality Labs Division
The Reality Labs division, focused on the metaverse, recorded sales of $440 million in the first quarter, falling short of expectations.
Monetization Strategies
Zuckerberg outlined potential monetization strategies for Meta’s AI chatbot, including integration into business messaging and customer support services.
Market Reaction
Despite the market’s reaction, Meta reported a first-quarter revenue of $36.5 billion, in line with expectations.