Meta’s Q1 Beats On Top, Bottom Line But High-Flying Stock Dips On Costs, Revenue Outlook

Jill Goldsmith
·2-min read

Facebook parent Meta posted solid quarterly financials today with revenue and EPS beating Wall Street expectations, but investors dinged the stock on high expenses and lower than anticipated revenue for the current quarter. Shares are down 10% in after-market trading.

What Meta calls “Family daily active people” or DAP, rose 7% to 3.24 billion for the three months ended in March. The company also owns Instagram and WhatsApp.

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Revenue rose 27% to $36.46 billion for the quarter. Net income of $12.4 billion was way up from $5.7 billion the year before.

The company’s numbers hit the same day that President Biden signed into a law legislation that will make life difficult for giant rival TikTok, whose Chinese parent has about nine months to divest the social media network or potentially see it banned from U.S. app stores. This is shaping up to be a massive legal battle with potential good news for rivals like Meta’s Reels. CEO Mark Zuckerberg will likely be asked about it on a call starting at 5 pm ET.

Zuckerberg, who pivoted aggressively to the Metaverse along with the company’s name change to Meta from Facebook, has pivoted some to focus on AI.

“It’s been a good start to the year,” said Zuckerberg, Meta founder, in a statement. “The new version of Meta AI with Llama 3 is another step towards building the world’s leading AI. We’re seeing healthy growth across our apps and we continue making steady progress building the metaverse as well.”

However, Meta said it expects second quarter 2024 total revenue to be in the range of $36.5-39 billion, with the midpoint lower than anticipated. Full-year 2024 total expenses in the range of $96-99 billion re higher than the company’s prior outlook of $94-99 billion, it noted, due to higher infrastructure and legal costs.

Reality Labs’ — the division that produces virtual reality hardware and software — will see its operating losses “increase meaningfully year-over-year due to our ongoing product development efforts and our investments to further scale our ecosystem,” the company said. Capital spend in the range of $35-40 billion is up from a previous $30-37 billion range “as we continue to accelerate our infrastructure investments to support our artificial intelligence (AI) roadmap.”

Meta sees expenditures continuing to increase in 2025 as well “as we invest aggressively to support our ambitious AI research and product development efforts.”

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