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The logo of Meta Platforms in Davos, Switzerland, May 22 2022. Picture: REUTERS/ARND WIEGERMANN
The logo of Meta Platforms in Davos, Switzerland, May 22 2022. Picture: REUTERS/ARND WIEGERMANN

Bengaluru/New York — Meta Platforms on Wednesday forecast that second-quarter revenue could come in below market expectations, signalling a possible reality check around hopes for how much new artificial intelligence (AI) tools may boost the company’s business.

Meta’s shares dropped about 10% in extended trade following the report, evaporating $125bn worth of stock market value.

The Facebook and Instagram parent expects April-June revenue in the range of $36.5bn-$39bn, with a midpoint of $37.8bn, compared with analysts’ estimates of $38.3bn, according to LSEG data.

Meta also raised its forecast for expenses this year to support its investments in new AI products and the computing infrastructure needed to support them.

The company expects 2024 capital expenditure to fall within a range of $30bn to $40bn, up from its earlier forecast of $35bn to $37bn. It also raised its total expense forecast to $96bn-$99bn, up from $94bn to $99bn. 

The results appeared to temper expectations after a series of smash-hit quarters for Meta, culminating in the biggest one-day gain in market capitalisation in Wall Street history after its last quarterly report, when it posted robust results and announced its first dividend.

The social media giant has been updating its ad-buying products with AI tools and short video formats to boost revenue growth, while also introducing new AI features like a chat assistant to drive engagement on its social media properties.

It announced last week that it is giving its Meta AI assistant more prominent billing across its suite of apps, meaning it will start to see how popular the product is with users in the second quarter.

The company also benefits from regulatory pressures bearing down on its Chinese-owned short video competitor TikTok, which is facing the threat of a US ban.

Meta posted first-quarter revenue of $36.5bn, roughly in line with expectations of $36.2bn, according to LSEG data.

Meta’s daily active people, a metric it uses to track unique users of any one of its apps Facebook, Instagram, Messenger or WhatsApp in a day, grew 7%. Daily users grew 8% in the preceding quarter.

Meta disclosed only the daily users figure for user growth, a first for the company. It said earlier this year that it would no longer break out numbers for flagship social network Facebook, growth of which has slowed in recent years.

Reuters 

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