On Wednesday, Meta Platforms underwhelmed investors by projecting higher expenses and lower-than-anticipated revenue, leading to a significant drop of close to $200 billion in its market capitalization. Concerns arose that the escalating costs of artificial intelligence (AI) are surpassing the returns it brings.
The owner of Facebook and Instagram experienced a decrease of approximately 15% in its stock price during after-hours trading, with its market value plummeting to roughly $1 trillion.
The decline in Meta’s market value towards the end of the day fell just shy of the $232 billion loss incurred on February 3, 2022, which previously stood as the largest single-day decline in market capitalization for any American firm.
Meanwhile, Meta reported a first-quarter revenue of $36.5 billion, in line with projections of $36.2 billion as per data from the London Stock Exchange Group (LSEG).
The tech giant disclosed its expectation of generating revenues between $36.5 billion and $39 billion in the second quarter, with a midpoint of $37.8 billion. This guidance was lower than analysts’ estimates of $38.3 billion.
In order to facilitate the development of new AI offerings and the essential computing infrastructure to support them, Meta heightened its projected expenses for the year, while also indicating that it foresees a continuation of expenditure growth into the following year.
The company elevated its anticipated total expenses for 2024 to a range of $96 billion to $99 billion, up from the previous forecast of $94 billion to $99 billion. Furthermore, it projected that its 2024 capital expenditure would be within a range of $30 billion to $40 billion, an increase from the prior estimate of $35 billion to $37 billion.
