Meta shares drop over 15% after light forecast despite strong first-quarter results

Published: 24 April 2024 at 20:27

Business

Meta's revenue increased 27% to $28.65 billion in the first quarter with net income more than doubling to $12.37 billion. Sales and marketing costs decreased by 16%. The company expects second-quarter sales between $36.5 billion to $39 billion, falling below analysts' estimates. CEO Mark Zuckerberg's mention of investments in non-profitable areas during the earnings call led to the stock selloff. Meta no longer reports daily or monthly active users, revealing 3.24 billion 'family daily active people' in March 2024. Investor expectations have risen, with the stock up 40% this year.

DEEP DIVE

Meta Platforms (Wikipedia)

Meta Platforms, Inc., doing business as Meta, and formerly named Facebook, Inc., and TheFacebook, Inc., is an American multinational technology conglomerate based in Menlo Park, California. The company owns and operates Facebook, Instagram, Threads, and WhatsApp, among other products and services. Meta ranks among the largest American information technology companies, alongside other Big Five corporations Alphabet (Google), Amazon, Apple, and Microsoft. The company was ranked #31 on the Forbes Global 2000 ranking in 2023.Meta has also acquired Oculus (which it has integrated into Reality Labs), Mapillary, CTRL-Labs, and a 9.99% stake in Jio Platforms; the company additionally endeavored into non-VR hardware, such as the discontinued Meta Portal smart displays line and presently partners with Luxottica through the Ray-Ban Stories series of smart glasses. Despite endeavors into hardware, the company relies on advertising for a vast majority of its revenue, amounting to 97.8 percent in 2023.Parent company Facebook, Inc. rebranded as Meta Platforms, Inc. on October 28, 2021, to "reflect its focus on building the metaverse", an integrated environment linking the company's products and services.

Meta's Threads App Sees Growth in Monthly Users and Daily Engagement

Mark Zuckerberg announced during Meta's earnings call that the Threads app now has over 150 million monthly users, showing a steady growth trend. Despite the initial explosive growth, the app is now focusing on building a sticky experience for daily users. Threads outperforms X (Twitter) in daily users in the United States and recently gained attention when Taylor Swift joined. Unlike other Meta apps, Threads currently does not have advertising, but future monetization plans are considered once the app expands further.

Meta (Wikipedia)

Meta most commonly refers to:Meta (prefix), a common affix and word in English (lit. 'beyond' in Greek)Meta Platforms, an American multinational technology conglomerate (formerly Facebook, Inc.)Meta or META may also refer to:

Zuckerberg wants more companies to build Meta-powered headsets

Meta ( META ) CEO Mark Zuckerberg is taking a page out of Googles Android playbook by announcing on Monday that his company will make its Meta Horizon operating system for AR/VR headsets open source. The move means that third-party firms will now be able to use Meta Horizon as the software backbone for their own headsets. Zuckerberg announced the move via Instagram , saying that the next age of computing should be powered by an open software model. Our goal is to make it so that the open model defines the next generation of computing again with the metaverse, glasses and headsets, said Zuckerberg. So thats why we're releasing our operating system so that more companies can build different things on it.

Mark Zuckerberg Purchases Double the Number of GPUs Needed for Meta, Focused on Algorithm Changes for Reels and Instagram

Mark Zuckerberg bought a large number of GPUs in 2022 for Meta, not for generative AI, but to focus on algorithm changes for Reels, Instagram, and Facebook. The shift was from a user's following to 'unconnected content,' inspired by TikTok's algorithm. Zuckerberg aimed to catch up with TikTok's success by investing in GPUs and algorithm modifications, ensuring readiness for unforeseen advancements. The decision to double the GPU investment, anticipating future needs, was considered a wise move based on past mistakes.

Meta AI (Wikipedia)

Meta AI is an artificial intelligence laboratory owned by Meta Platforms Inc. (formerly known as Facebook, Inc.) Meta AI develops various forms of artificial intelligence, developing augmented and artificial reality technologies. Meta AI is an academic research laboratory focused on generating knowledge for the AI community. This is in contrast to Facebook's Applied Machine Learning (AML) team, which focuses on practical applications of its products.

Threads (social network) (Wikipedia)

Threads is an online social media and social networking service operated by Meta Platforms. The app offers users the ability to post and share text, images, and videos, as well as interact with other users' posts through replies, reposts, and likes. Closely linked to Meta platform Instagram and additionally requiring users to both have an Instagram account and use Threads under the same Instagram handle, the functionality of Threads is similar to X (formerly known as Twitter). The application is available on iOS and Android devices; the web version offers limited functionality and requires a mobile app to be installed first. It is the fastest-growing consumer software application in history, gaining over 100 million users in its first five days, surpassing the record previously set by ChatGPT. Its early success was not sustained and the user base of the app plummeted more than 80% to 8 million daily active users by the end of July.After Elon Musk's acquisition of Twitter in October 2022, Meta employees explored the concept of introducing text-based functionality to Instagram. This feature, known as Instagram Notes, was rolled out in December 2022. The company subsequently began developing a separate app focused on text-based posts. Development on Threads—internally known as "Project 92"—commenced in January 2023, with the platform officially launching on July 5, 2023. Threads immediately became available in 100 countries (out of 193 UN member states), but until December 14, 2023 had delayed its launch in the European Union as it waited for regulatory clarity from the European Commission regarding the service's data collection policies.

Mark Zuckerberg (Wikipedia)

Mark Elliot Zuckerberg (; born (1984-05-14)May 14, 1984) is an American businessman and philanthropist. He co-founded the social media service Facebook, along with his Harvard roommates in 2004, and its parent company Meta Platforms (formerly Facebook, Inc.), of which he is chairman, chief executive officer and controlling shareholder.Zuckerberg briefly attended Harvard University, where he launched Facebook in February 2004 with his roommates Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes. Originally launched in only select college campuses, the site expanded rapidly and eventually beyond colleges, reaching one billion users in 2012. Zuckerberg took the company public in May 2012 with majority shares. In 2007, at age 23, he was the world's youngest self-made billionaire at the time. He has since used his funds to organize multiple philanthropic endeavors, including the establishment of the Chan Zuckerberg Initiative.Time named Zuckerberg one of the most influential people in the world in 2008, 2011, 2016 and 2019, and nominated him as a finalist several other times. He was named the Time Person of the Year in 2010, the same year when Facebook eclipsed more than half a billion users. In December 2016, Zuckerberg was ranked tenth on the Forbes list of the World's Most Powerful People. In the Forbes 400 list of wealthiest Americans in 2023, he was ranked eighth with a personal wealth of $106 billion. As of March 2024, Zuckerberg's net worth was estimated at $178 billion by Forbes, making him the fourth richest person in the world. A film depicting Zuckerberg's early career, legal troubles and initial success with Facebook, The Social Network, was released in 2010 and won multiple Academy Awards.Zuckerberg's prominence and fast rise in the technology industry has prompted political and legal attention. The founding of Facebook involved Zuckerberg in multiple lawsuits regarding the creation and ownership of the website as well as issues of user privacy. In 2013, he co-founded the pro-immigration lobbying group FWD.us. On April 10 and 11, 2018, Zuckerberg testified before the United States Senate Committee on Commerce, Science, and Transportation regarding the usage of personal data by Facebook in relation to the Facebook–Cambridge Analytica data scandal.

Salesforce-Informatica Acquisition Rumors Fizzle as Talks Stagnate

Salesforce's potential acquisition of Informatica, reported by The Wall Street Journal, has cooled off as the companies struggle to agree on terms, with Informatica publicly stating it's not for sale. Investors are concerned about pricing and the impact on both companies' stock prices. Informatica's cloud subscription revenue growth could benefit Salesforce, yet its smaller size raises doubts amongst investors. Salesforce's previous acquisitions include Slack and Tableau. Negotiations stress mutual agreements and investor satisfaction's importance in deals. Informatica's shares dropped, while Salesforce's rose after the news broke.

Palmer Luckey, Oculus VR creator fired from Facebook, challenges Meta to reveal truth behind his exit

Palmer Luckey, the creator of Oculus VR, who was controversially fired from Facebook in 2017 after supporting Donald Trump, has challenged Meta to disclose the circumstances of his exit. Luckey and Meta's CTO, Andrew Bosworth, exchanged barbs about Luckey's departure, with Luckey questioning Bosworth's credibility. Luckey claimed he was fired for his political views, which Meta denied, stating his departure was not due to politics. John Carmack, a key figure in Meta's VR efforts, defended Luckey's firing and criticized the internal pressure surrounding Luckey's political donations. Luckey has called for transparency from Meta regarding his firing.

Meta Announces Next-Generation AI Chips for Faster Training Models

Meta introduces the Meta Training and Inference Accelerator (MTIA) chips, with the upcoming generation set to be more powerful and aim to train ranking models quicker. The new chips will target data centers, enhancing efficiency in training ranking and recommendation algorithms, with plans to expand into training generative AI models. Meta's focus on custom silicon aims to balance compute, memory bandwidth, and capacity. Competing with Google, Amazon, and Microsoft in developing custom AI chips, Meta aims to reduce costs for AI training and keep up with advancing technologies.

Meta's AI Image Generator Accused of Racial Bias for Failing to Generate Images of Mixed-Race Couples

Users criticized Meta's AI image generator for its racial bias after it was unable to create images depicting Asian men with white women, despite Meta CEO Mark Zuckerberg's marriage to an Asian woman. The AI was found to only generate images of East Asian men and women, failing to depict mixed-race couples in various prompts. Critics on social media described the AI as 'racist software made by racist engineers'. Reporter Mia Satto from The Verge also highlighted the AI's limitations in generating diverse images.