Meta’s stock drops on light revenue guidance, dwindling free cash flow
Meta said legal and severance charges lifted expenses 55% as shares fell 4.2% after it forecast revenue below analyst estimates.
- On Wednesday, Meta Platforms reported revenue grew 28% to $60.8 billion for the April-June period, though profit fell 14% to $15.85 billion, or $6.18 per share, missing Wall Street expectations.
- Total expenses surged 55% to $42.03 billion, driven by $2.40 billion in legal charges and $1.18 billion in severance costs for roughly 8,000 workers laid off in May.
- The Menlo Park, California-based company saw daily active users on its "family of apps"—Facebook, Messenger, Instagram, and WhatsApp—grow 3% from a year earlier to 3.6 billion.
- Meta shares fell $24.76, or 4.2%, to $560.85 in after-hours trading, as investors responded to the profit decline and rising operational costs.
- For the current quarter, Meta forecasts revenue between $61 billion and $64 billion, below the $63.14 billion Analysts expected, though CEO Mark Zuckerberg stated AI is "accelerating our core business.
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Facebook's parent company, Meta, posted solid results in the second quarter of this year, but its stock price plummeted more than 6% after presenting a third-quarter earnings forecast that fell short of market expectations. This was due to growing concerns that massive investments in artificial intelligence (AI) have not yet translated into tangible results. Meta announced on the 29th (local time) that its second-quarter revenue was $60.8 billio…
The social media giant Meta reported on Wednesday record advertising revenues, but revealed a profitability offset by its still massive spending on artificial intelligence: the title fell by almost 12% in electronic exchanges after the closing of Wall Street.
Last year, the Facebook group Meta invests a good 72 billion dollars in AI infrastructure. This year, spending will double. For investors, too much of a good thing: they throw meta shares out of the depots despite record sales.
The Key Takeaways From Meta's Earnings and Lackluster Forecast
Ygal Arounian, Wedbush managing director, Internet equity research, reacts to Meta Platforms Inc.'s second-quarter earnings and disappointing earnings forecast on "Bloomberg The Close." (Source: Bloomberg)
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