Meta Shares fell 11% Thursday afternoon after the company issued weak revenue guidance that eclipsed its first-quarter results. The stock was trading at around $438 as of 1 p.m. ET, on track for its worst day since October 2022 and erasing around $141 billion in market capitalization from its pre-earnings closing price of $493.5. Wednesday.
The company reported earnings per share of $4.71 on revenue of $36.46 billion for the quarter, beating the expected $4.32 earnings per share and $36.16 billion of expected sales, according to LSEG.
The stock sell-off accelerated in extended trading Wednesday after CEO Mark Zuckerberg discussed spending in areas such as artificial intelligence and mixed reality that are currently unprofitable.
Meta expects second-quarter revenue of $36.5 billion to $39 billion. The midpoint of the range, $37.75 billion, was below analysts’ average estimate of $38.3 billion.
Meta CEO Mark Zuckerberg attends the Senate Judiciary Committee hearing on online child sexual exploitation at the U.S. Capitol in Washington, DC, January 31, 2024.
Nathan Howard | Reuters
JPMorgan analysts reiterated their overweight on Meta while lowering their price target from $535 to $480, citing the company’s increasingly heavy investments in AI that they believe could ultimately pay off.
“Meta’s virtual ownership of the social graph, strong competitive advantage, and focus on user experience make it a sustainable blue-chip company built for the long term,” they wrote in a note Thursday.
Bernstein analysts, maintaining an outperform rating on Meta shares, cut their price target from $590 to $565 and described the company’s current trading strategy as a “costly offensive” with a longer payback .
“We face uncertainty, but Meta deserves to maintain a high multiple here,” they wrote in a note Wednesday. “Without sounding too religious, you either believe in Zuck or you don’t, and we do.”
Analysts at Barclays maintained an overweight on Meta stock and lowered their price target from $550 to $520 in a note to investors Wednesday. They affirmed their confidence in the “long-term name” despite what they expect to be “a bumpy ride through the remainder of 2024 as revenue growth rates slow significantly from here.”
“If there’s anything META has proven over the years, it’s that it’s extremely effective at executing during large technology platform changes, arguably the best,” the analysts wrote from Barclays. “We haven’t heard anything from Zuckerberg that causes great concern.”
— CNBC’s Michael Bloom contributed to this report.
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