Meta has just announced its first quarter business results with revenue increasing 27% to 36.46 billion USD, net income more than doubling to 12.37 billion USD compared to the same period in 2023.
One reason for the strong increase in net income was a 16% decrease in marketing and sales expenses. Personnel size decreased by 10% to 69,329 people.
Parent company Facebook predicts second-quarter revenue of between $36.5 billion and $39 billion, representing an 18% year-over-year increase. Capital expenditures in 2024 are expected to be around $35 billion to $40 billion due to continued acceleration of investment in infrastructure to support the artificial intelligence (AI) roadmap.
The Reality Labs division, in charge of hardware and software to develop virtual universes, reported revenue of $440 million and a loss of $3.85 billion, bringing total losses from the end of 2020 to more than $4.5 billion.
The sell-off in Meta stock came at the start of CEO Mark Zuckerberg’s earnings call, where he discussed investments, mainly in areas like mixed reality wearables, where the company has yet to make a profit. make money. According to Zuckerberg, the positive side is that once new AI services reach large scale, they can make money effectively.
According to CNBC, CEO Meta spent most of the opening statement talking about things that are making the company lose money. Investors expressed their views by selling off stocks. With the stock falling 19%, Meta’s capitalization “evaporated” more than 200 billion USD in one day.
It seems that Zuckerberg himself also guessed this when he said: “Historically, our stock fluctuates very strongly during this phase of the product, when investing to scale a new product but not yet making money from it.” He mentioned previous efforts such as Reels, Stories and the transition from desktop to mobile.
In 2023, Facebook shares nearly tripled and despite falling 19% on April 24, in 2024 alone, it also increased in price by 40%, reaching a peak of 527.34 USD at the beginning of the month.
After a “bruising” year in 2022, when he lost about two-thirds of his capitalization, Zuckerberg has regained trust from investors. The big driving force is the cost-cutting plan that CEO Meta set out early last year and called 2023 “the year of efficiency”. The group laid off staff and eliminated unnecessary projects in order to become “a stronger and more agile organization”.
Zuckerberg predicts a “multi-year investment cycle” before Meta’s AI products reach the scale to become profitable. Chief Financial Officer Susan Li backed up her boss’s statement, saying the company needs to develop modern models and scale products before delivering meaningful revenue.
CEO Meta reassures investors that if they are willing to “get on board” and stick around for a long time, they will be rewarded handsomely.
(According to CNBC)
Tags: Meta lost billion capitalization Mark Zuckerbergs ambitions
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