Meta (META) Stocks Plunge 15% amid Aggressive AI Spending and Forecasted Metaverse Division Losses
Summary:
After announcing plans for a notable increase in artificial intelligence (AI) spending and continuous losses in its metaverse division against a backdrop of a weak revenue outlook, shares of Meta (META) plummeted by 15% in after-hours trading. As per the Q1 2024 results, Meta persists in its aggressive investment towards advanced AI research and product development, despite losses. The company's Reality Labs division, tasked with constructing its metaverse, recorded a Q1 loss of $3.85 billion. However, the company expects such losses to rise year by year to fuel the further product development.
Meta (META) experienced a 15% fall in after-hours trade following the company's declaration of a formidable increase in artificial intelligence expenditure, coupled with sustained losses in its metaverse division and a forecast of sluggish revenues. According to its Q1 2024 report issued on April 24, the tech giant predicted a surge in spending, estimating a range of $96 billion to $99 billion, a slight increase from the previously forecasted range of $94 billion to $99 billion. This adjustment was attributed to escalated infrastructure and lawsuit-related expenses. Concurrently, the corporation elevated its capital expenditures for the full 2024 fiscal year to a maximum of $40 billion, up from an earlier cap of $37 billion, as it vowed to significantly back its advanced AI projects and product enhancement.
Its division responsible for constructing its metaverse, Reality Labs, recorded a $3.85 billion loss in the first quarter, a decrease compared to nearly $4 billion losses it reported for the same period in 2023. Despite this, Meta stated that it anticipated these losses to augment yearly, justified by the need to finance the division's product development. Related to this, Mark Zuckerberg recently hinted at the imminent launch of Meta wearables designed to interpret neural signals. After trading hours on April 24, META stocks plummeted 15.4% to a value of $417.22, succeeding a 0.5% decline to $493.50 at the close of day trading, as reported by Google Finance. The company saw its stocks dip to an all-time low of $402.98 in after-hours trading before a mild recovery. Despite the day's losses, Google Finance data accord that Meta's stocks have gained 42.5% thus far in the year, after reaching a record high of $527.34 on April 5. As this situation unfolds, more details will be incorporated into this report.
Published At
4/25/2024 2:30:35 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.