Meta Platforms Inc., the parent company of Facebook and Instagram, posted a strong first quarter, buoyed by increased advertising revenue and a rise in the average price of ads on its platforms. The company’s net income surged to $12.37 billion, or $4.71 per share, in the January-March period, compared to $5.71 billion, or $2.20 per share, in the same period last year. Revenue jumped 27% to $36.46 billion from $28.65 billion. Analysts, on average, had anticipated earnings of $4.32 per share on revenue of $36.14 billion, according to a poll by FactSet.
However, Meta’s shares dropped sharply in after-hours trading following the release of its earnings report, primarily due to the company’s subdued revenue guidance for the current quarter. Meta expects revenue to range between $36.5 billion and $39 billion, while analysts had been predicting revenue of $38.25 billion for the second quarter, which is higher than the midpoint of Meta’s guidance range.
The company also announced that its capital expenses for 2024 will be higher than anticipated due to its investments in artificial intelligence. Meta now forecasts expenses in the range of $35 billion to $40 billion, up from its previous guidance of $30 billion to $37 billion. Meta has been investing heavily in AI and earlier this month unveiled a number of new AI-powered products, including a chatbot that CEO Mark Zuckerberg believes is “the most intelligent AI assistant that you can freely use.”
Despite the challenges, Meta’s user base continued to grow, with 3.24 billion people using its “family of apps,” which includes Facebook, Instagram, WhatsApp, and Messenger, on average in March. This represents a 7% increase year-over-year. However, the company will no longer disclose user figures for Facebook beginning this quarter.
Meta’s workforce has also undergone significant changes, with the company laying off thousands of employees to reduce expenses. As of March 31, Meta had 69,329 workers, a 10% decrease year-over-year. Zuckerberg has declared 2023 the “year of efficiency” for the company.
Meta’s stock price has more than doubled over the past year, thanks in part to a rebound in online advertising. However, the recent decline in after-hours trading suggests that investors are concerned about the company’s near-term prospects.
