- Meta shares plunged as much as 15% in premarket trading, dragging U.S. futures lower.
- Investors have not been convinced by Mark Zuckerberg’s plan to continue spending tens of billions on AI.
- Meta also issued lackluster revenue guidance as part of its first-quarter earnings report.
Meta stock plunged in premarket trading Thursday as investors worried that Mark Zuckerberg’s artificial intelligence efforts could send costs skyrocketing.
Shares fell as much as 15% and were still down 13% at just over $430 shortly after 5 a.m. ET, part of a selloff that will erase about $160 billion from the value of Meta if she holds on until the opening bell.
The losses came after Meta reported results for the first three months of the year on Wednesday.
Its earnings of $4.71 per share and revenue of $36.5 billion beat the expectations of analysts surveyed by Refinitiv, but poor guidance took some of the shine off those results.
Meta expects to report revenue between $36.5 billion and $39 billion in the current quarter. The midpoint would be lower than the $38.3 billion figure analysts expected.
In a conference call after the results, Zuckerberg outlined his plans to invest more in AI. Meta said it was increasing its planned capital spending for 2024 to between $35 billion and $40 billion “to accelerate our infrastructure investments to support our artificial intelligence (AI) roadmap.”
Zuckerberg’s previous pledge to keep costs low during a “year of efficiency” has helped Meta’s stock rally since the start of 2023. Shares have soared 107% over the past 12 months and 42% this year as of Wednesday’s close.
“An exceptional rally in Meta shares came to a screeching halt based on share trading following the company’s first quarter results update,” said Russ Mould, chief investment officer at AJ Bell. “The main sticking point for investors appears to be the sharp increase in capital spending on artificial intelligence.”
“Previous concerns about Mark Zuckerberg’s lack of discipline have been reignited, undoing some of the hard work the company has done to convince the market that it tightly controls the purse strings,” he added. .
Meta’s losses looked set to weigh on the broader indexes on Thursday, with S&P 500 futures falling 0.5% and tech-heavy Nasdaq 100 futures falling 0.9%.
The remaining Magnificent Seven companies, Microsoft and Alphabet, are expected to report first-quarter results after the closing bell, while the Bureau of Economic Analysis is expected to release advance estimates of U.S. GDP for the three months through March 31 .
businessinsider
