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Why is Meta Platforms Inc (META) Stock down?

25 Apr, 2024:

Meta Platforms Inc (META) stock crashed bby 10.56% triggered by a proposed increase in spending to support its artificial intelligence (AI) endeavors.

  • Surprising Catalyst: AI Spending Plans: The primary reason for the downturn stemmed from Meta's plans outlined in its quarterly report, particularly regarding the significant boost in spending earmarked for advancing its artificial intelligence capabilities. As the market balked at rising costs at the Facebook and Instagram owner, which plans to spend up to $10 billion on AI infrastructure investments. Results from other Big Tech companies after the bell on Thursday appeared to calm any concern that Meta's disappointment will be a theme throughout the sector.
  • Financial Performance Highlights: Despite the stock's decline, Meta reported robust financial performance in the first quarter, with revenue growing by 27% year over year to $36.4 billion. Operating margins surged to 38%, up from 25% in the prior-year quarter, driven by a modest 6% increase in expenses. Earnings per share (EPS) soared by 114% to $4.71, surpassing analysts' consensus estimates of $4.32.
  • AI Investment Expansion: The revelation of Meta's plans to bolster AI capabilities led to a revised full-year forecast for capital expenditures, now ranging between $35 billion to $40 billion, up from the previous outlook of $30 billion to $37 billion. Meta emphasized its commitment to accelerating infrastructure investments to support its AI roadmap, with even higher capital spending projected for 2025.
26 Oct, 2023:

Meta Platforms Inc Stock (META) dropped by 3.73% from $299.53 to $288.35 in the trading on Thursday October 26, 2023. The reason why META stock down today is due to the weak outlook for advertising revenue. Meta published its Q3 results, delivering performance that came in well ahead of the market's expectations. The company's earnings performance beat the average analyst target by $0.76 per share, and sales beat the average target by roughly $700 million. But Meta's forward guidance and commentary are dragging on the stock, along with a general uptick in bearish sentiment surrounding the tech sector. For Q4, Meta is guiding for sales to come in between $36.5 billion - $40 billion. Meanwhile, the average analyst estimate had called for sales of $38.87 billion in the quarter. In addition to the midpoint of its guidance falling short of Wall Street's target, management's commentary during the earnings call has been broadly perceived as cautious.

26 Jun, 2023:

Shares of Meta Platforms (META) closed the session down 3.6% today, in line with a broad sell-off in tech stocks and after the company launched a new VR subsciption service that seemed to fail to excite investors. The subscription could add a new revenue stream for Meta, but it's also evidence that the headset is mostly a device for gamers, adding to the perception that its utility is limited.


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