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Key Takeaways
- Meta shares plunged in after-hours trading Wednesday despite an earnings beat as the company provided weak guidance for the second quarter and raised the lower end of its projected full-year expenses.
- Meta’s revenue for the first quarter was $36.46 billion, representing 27% year-over-year growth, while net income of $12.37 billion more than doubled from the year prior.
- The company recently unveiled several artificial intelligence (AI) initiatives including Llama 3, an AI assistant, and its own in-house AI-capable chip.
Meta Platforms (META) shares tumbled over 12% in after-hours trading Wednesday despite an earnings beat as the company provided weak guidance and raised the lower end of its projected full-year expenses.
The company said it expects revenue for the second quarter to be between $36.5 billion and $39 billion, while analysts were expecting $38.39 billion, at the higher end of Meta’s range, according to estimates compiled by Visible Alpha.
Meta also guided full-year 2024 total expenses to be between $96 billion and $99 billion, compared to its prior outlook of $94 billion to $99 billion, citing “higher infrastructure and legal costs.”
The tech giant updated its full-year capital expenditures guidance to between $35 billion and $40 billion, up from between $30 billion and $37 billion, due to “infrastructure investments to support our artificial intelligence (AI) roadmap.”
The company’s revenue for the first quarter of 2024 was $36.46 billion, above analyst expectations and a 27% increase from the year-ago period. Net income and diluted earnings per share (EPS) were also above analysts’ estimates and more than doubled from a year earlier.
| Q1 2024 | Analyst Estimates for Q1 2024 | Q1 2023 | Year-Over -Year (%) Change | |
|---|---|---|---|---|
| Revenue | $36.46 billion | $36.27 billion | $28.65 billion | 27% |
| Diluted Earnings Per Share | $4.71 | $4.34 | $2.20 | 114% |
| Net Income | $12.37 billion | $11.35 billion | $5.71 billion | 117% |
Investors and analysts have been keeping a close watch on the company’s advertising revenue growth, not just because it comprises almost all of Meta’s revenues but also because the company has been experimenting with artificial intelligence (AI) tools to help advertisers target their ads better.
Meta has doubled down on leveraging its AI tech with the company unveiling is AI assistant for Whatsapp, Instagram, and Facebook that could rival OpenAI’s ChatGPT, less than a week ago.
Earlier this month, the company also announced its custom AI-capable chip. Many other tech giants like Google parent Alphabet (GOOGL), Microsoft (MSFT), and Amazon (AMZN) have also developed their own chips to reduce the market’s reliance on Nvidia for AI chips.
Meta shares were down 12.1% at $433.80 as of 4:50 p.m. ET in after-hours trading Wednesday, though even at that price, they’ve gained over 22% since the start of 2024.