On 24 April 2024, Meta Platforms Inc (NASDAQ: META) Reported its First Quarter 2024 Results.

According to Meta’s press release, Mark Zuckerberg, Meta founder and CEO, had this to say:

It’s been a good start to the year. The new version of Meta AI with Llama 3 is another step towards building the world’s leading AI. We’re seeing healthy growth across our apps and we continue making steady progress building the metaverse as well.

As for the Meta CFO, Susan Li, she said:

We expect second quarter 2024 total revenue to be in the range of $36.5-39 billion. Our guidance assumes foreign currency is a 1% headwind to year-over-year total revenue growth, based on current exchange rates.

We expect full-year 2024 total expenses to be in the range of $96-99 billion, updated from our prior outlook of $94-99 billion due to higher infrastructure and legal costs. For Reality Labs, we continue to expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts and our investments to further scale our ecosystem.

The next day, Sarah Kunst, Managing Director at Cleo Capital, appeared on CNBC’s “Worldwide Exchange” to discuss Meta’s earnings report

Here’s a detailed breakdown of her comments:

  1. Stock Performance and Capex Guidance:
    • Kunst noted the significant drop in Meta’s stock price due to the company raising its capital expenditure (capex) guidance while also providing soft revenue guidance. She suggested that this investor reaction is partly fueled by prior experiences with CEO Mark Zuckerberg’s ambitious projects, which haven’t always panned out, referencing his foray into the metaverse as an example.
  2. AI Investments:
    • Despite the costliness of AI, Kunst argued that investing in this technology makes sense for Meta. She emphasized that AI is a substantial and real opportunity, given Meta’s technological capabilities and wealth of data. Kunst expressed confidence that Meta’s bet on AI would be profitable for those investors who remain unshaken by short-term uncertainties.
  3. Metaverse Skepticism:
    • Kunst was critical of Zuckerberg’s continued investment in the metaverse, particularly highlighted by the substantial losses ($3.85 billion) reported by Meta’s Reality Labs segment. She compared this unfavorably with competitors like Apple, who are also venturing into augmented reality technologies. Kunst implied that the market had not embraced the metaverse technology, regardless of the promoter.
  4. Digital Ads Business:
    • Meta’s primary revenue source, digital advertising, missed estimates by 6%, which Kunst attributed to a broader global shift in advertising dynamics rather than a specific issue at Meta. She discussed how the current geopolitical and domestic unrest affects brand-safe advertising, suggesting that these factors are causing companies to reconsider where their ads are placed.
  5. Comparison with Other Tech Giants:
    • She highlighted that while digital ads are a significant revenue stream for other tech companies like Alphabet, Microsoft, and Amazon, Amazon might be better positioned in the current market. This is due to Amazon’s focus on product listing ads, which are considered more brand-safe compared to the social content-based ads prevalent on platforms like Meta.

At the time of writing (5:46 p.m. UTC on April 25), META is trading at $437.88, down 11.27% on the day.

Source: Google Finance

Featured Image via YouTube (Meta’s Channel)

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