Meta's value plummets as Zuckerberg admits AI needs more time and money
- Reference: 1714050008
- News link: https://www.theregister.co.uk/2024/04/25/facebooks_value_plummets_as_zuckerberg/
- Source link:
At first glance, [1]results for the first calendar quarter of 2024 looked promising. Revenue was up 27 percent year-on-year to $36.5 billion, operating profit almost doubled, climbing 91 percent to $13.8 billion, and operating margin jumped from 25 percent to 38 percent.
Analysts would also normally have looked kindly upon the 10 percent drop in headcount, down to 69,329 by March 31, 2024.
[2]
However, an otherwise rosy set of results was blighted first by the admission that Meta expects losses from its VR division, Reality Labs, to continue increasing – the operating loss was $3.8 billion for Q1 – and capital expenditure for 2024 is to increase from between $30-$37 billion to $35-$40 billion "as we continue to accelerate our infrastructure investments to support our artificial intelligence (AI) roadmap."
[3]
[4]
Meta didn't provide forecasts beyond 2024 but said, "We expect capital expenditures will continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts."
The second big knock for investors came during a [5]call with analysts [PDF], Zuck forecast a multi-year investment cycle would be needed before Meta's AI businesses become the "profitable services" he expects.
[6]
It was not what analysts wanted to hear, and the company's stock was pummeled in after-hours trading. Having closed at $493.50, it stood at $424.56 at the time of writing, a fall of more than 14 percent.
Other companies in the tech sector have bet big on AI, and the hype around the technology has become relentless. Microsoft, for example, has poured billions into OpenAI and crowbarred the technology into many of its products, and is [7]trying to convince customers of the value .
As such, seeing Meta take a beating after giving an honest assessment of where it is with AI – it's going okay, but it'll take more money and more time before it starts making a substantial contribution to the bottom line – could start alarm bells ringing on Wall Street and beyond.
[8]Meta comms chief handed six-year Russian prison sentence for 'justifying terrorism'
[9]Watchdog tells Dutch govt: 'Do not use Facebook if there is uncertainty about privacy'
[10]WhatsApp, Threads, more banished from Apple App Store in China
[11]EU tells Meta it can't paywall privacy
That said, Meta does have a particular set of problems. The CEO pointed out that it usually takes a while for the company to monetize a new product, which is fair enough until considering the ongoing losses from Meta's [12]Reality Labs division, which is responsible for the Quest VR headset line.
The Metaverse gamble has yet to pay off. The drop in value after the results could be an early sign that investors are unwilling to wait too long for AI revenues to come close to promises.
[13]
Microsoft and Google file their latest quarterly financials tonight, and Amazon reports numbers on April 30. ®
Get our [14]Tech Resources
[1] https://investor.fb.com/investor-news/press-release-details/2024/Meta-Reports-First-Quarter-2024-Results/default.aspx
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Zip@HkWwgjXto5kNobAwewAAAIY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zip@HkWwgjXto5kNobAwewAAAIY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zip@HkWwgjXto5kNobAwewAAAIY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://s21.q4cdn.com/399680738/files/doc_financials/2024/q1/META-Q1-2024-Earnings-Call-Transcript.pdf
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zip@HkWwgjXto5kNobAwewAAAIY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2024/03/18/microsoft_copilot_moneymaker/
[8] https://www.theregister.com/2024/04/23/meta_russian_prison/
[9] https://www.theregister.com/2024/04/22/meta_facing_dutch_government_departure/
[10] https://www.theregister.com/2024/04/19/whatsapp_threads_ban_china/
[11] https://www.theregister.com/2024/04/18/eu_meta_subscription_privacy/
[12] https://www.theregister.com/2023/04/19/meta_layoffs/
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zip@HkWwgjXto5kNobAwewAAAIY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://whitepapers.theregister.com/
"investors are unwilling to wait too long"
Of course they aren't.
They're not investors, they're gamblers. They want their fix, NOW (or soon, at the very least).
An investor is a person who wants to participate in a project, and is willing to put funds in it to bring it fruition, not to get a return in two years.
If the project is important, it could take ten years. A true investor knows that and is willing to take the risk because he believes in the project .
Today's "investors" are just selfish man-children who want their next lollipop for snack time. Long-term thinking ? Not their strong suit.
Re: "investors are unwilling to wait too long"
I don't think any investor will be happy seeing the claimed return being kicked further and further down the road. They'll start to wonder if there might have been stuff that would have been more worthwhile participating in.
Re: "investors are unwilling to wait too long"
Serious investors would have taken the time to understand what it was Meta was selling them before giving them any money in the first place (and then would probably have decided not to.)
I think OP's point here is that most of the people pouring money into Meta (and all the other new shiny tech stocks) aren't serious investors, they're gambling addicts with access to vast amounts of other people's money.
Re: "investors are unwilling to wait too long"
> they're gambling addicts with access to vast amounts of other people's money
Or they're following the momentum and attempting to profit from other people's bandwagon mentality. That can be a good strategy as long as you don't get caught holding the bag when it starts to fall apart.
Re: Serious investors ...
... invested in AI chip designers and fabricators.
Re: "investors are unwilling to wait too long"
There's not a lot they can do about it when Zuck has over 60% of the votes.
Can somebody come up with a suitable prompt …
… to generate a satisfying video of billions of dollars invested in AI going up in smoke?
Re: Can somebody come up with a suitable prompt …
Show me my money in 12 months if I invest it in AI right now? Show me what happened to all the money invested in NFT's? Show me what happened to the money Zuck ploughed into VR? Show me my money invested in Muskrat's enterprises (pick your own, Twatter/eX corporation or Tesla)? Show me a pile of money I put in one of Elon's spacecraft 15 minutes after launch?
All of these will produce the same video, wonder why?
For What?
"AI needs more time and money"
to do what?
Are they throwing billon$ of dollars in servers and chips at the wall hoping something sticks?
Is this some grand race to elimante labor costs so tech giants can operate with 100% profit from an unemployed human race with no $$$ to spend?
Just below the comment section there's another story: "Next-gen Meta AI chip servers up ads while sipping power."
WTAF?!!
(A = 'Actual')
Really seems like it's time to grab my coat and get outta here.
Farcebook's problem is that it's basically a one trick pony.
"The CEO pointed out that it usually takes a while for the company to monetize a new product,"
How many really new products have they monetised other than the original social media stuff?