- Meta shares fell as much as 15% in pre-market trading, pushing down U.S. futures.
- Investors weren't convinced by Mark Zuckerberg's plans to continue spending tens of billions of dollars on AI.
- Meta also issued a lackluster earnings outlook as part of its first-quarter earnings report.
Meta shares plunged in pre-market trading on Thursday as investors worried that Mark Zuckerberg's push for artificial intelligence would drive up costs.
Shares fell as much as 15% just after 5 a.m. ET and are still down 13% at just over $430, wiping Meta's value by about $160 billion if it holds out until the opening bell. become.
The loss came after Meta announced its earnings for the first three months of the year on Wednesday.
Earnings of $4.71 a share and revenue of $36.5 billion beat analysts' estimates compiled by Refinitiv, but the lackluster outlook took away some of the shine from the results.
Meta expects revenue of $36.5 billion to $39 billion for the current quarter. The midpoint is expected to be lower than analysts' expectations of $38.3 billion.
In a post-earnings conference call, Zuckerberg outlined plans to increase investment in AI. Meta said it is increasing its projected capital expenditures for 2024 from $35 billion to $40 billion “to accelerate infrastructure investments to support our artificial intelligence (AI) roadmap.”
Mr. Zuckerberg's previous pledge to keep costs low in a “year of efficiency” has contributed to Meta's rise since early 2023. The stock is up 107% in the past 12 months and 42% this year as of Wednesday's close.
“Meta's extraordinary rally came to a shuddering halt based on stock trading following the company's first-quarter earnings release,” said Russ Mould, investment director at AJ Bell. “The key bottleneck for investors appears to be a significant increase in capital spending on artificial intelligence.”
He added: “Old concerns about Mark Zuckerberg's lack of discipline have been reignited, and some of the efforts the company has made to convince the market that it's keeping its purse strings tight have It was ruined,” he added.
Meta losses are likely to impact broader indexes on Thursday. Futures on the S&P 500 fell 0.5%, and futures on the tech-heavy Nasdaq 100 fell 0.9%.
Microsoft and Alphabet, fellow “Magnificent Seven” companies, are scheduled to announce their first quarter results after the closing bell, and the Bureau of Economic Analysis will release advance forecasts for U.S. GDP for the three months ending March 31st. Being watched.
