Shares of Facebook and Instagram parent Meta Platforms are sinking heavily the company disappointed investors on with forecasts of higher expenses and lighter-than-expected revenue.
The plunge in shares knocked off nearly $200 billion of Meta’s stock market value, plunging its market capitalization to about $1 trillion.
Meta’s woes also spooked Alphabet (Google’s Parent) shares fell 3% in extended trade and Microsoft declined 2%, with the market being concerned that Wall Street may have underestimated the cost of the AI race.
Chip maker Nvidia also caught the jitters, losing 1.4% and Amazon dropped 2.6%.
Meta expects April-June revenue in the range of $36.5 billion-$39 billion, with a midpoint of $37.8 billion, falling way short of the market estimates of $38.3 billion.
The company raised its forecast for expenses this year to support investments in new AI products and the computing infrastructure needed to support them, adding that it expected spending would continue to increase next year.
Meta raised its 2024 total expense forecast to $96 billion-$99 billion, from $94 billion-$99 billion. It also expects 2024 capital expenditure to fall within a range of $30 billion-$40 billion, up from its earlier forecast of $35 billion-$37 billion, it said.
The company’s metaverse-oriented Reality Labs division missed expectations for the first quarter, posting sales of $440 million. Investors had been expecting $475 million.
Reality Labs lost $3.8 billion in the quarter, putting it on track this year to match the $16 billion it lost over the course of 2023.
Meta posted first-quarter revenue of $36.5 billion, roughly in line with expectations of $36.2 billion.
