Meta Stock Falls Over 15%

(LibertySociety.com) – April 24 was a bad day for Meta after the company’s stock price tumbled by 19 percent during extended trading hours. The $200 billion plummet came after CEO Mark Zuckerberg appeared to shift his focus to the metaverse and the possibilities of Meta’s artificial intelligence during the company’s earnings call, where he reported larger profits than originally projected. Investors were perturbed by Zuckerberg’s decision to pour resources into different areas while ignoring the company’s digital advertising, which brings in nearly all of its revenue. On April 25, shares of Meta were still down 15 percent in pre-market trading.

Zuckerberg admitted that the stock would be volatile as the new products were developed, acknowledging that monetization would not be instant. He referenced previous examples of the company taking risks on new features, such as Facebook’s and Instagram’s Stories and Reels. Zuckerberg gave an overview of Meta’s effort to build an artificial intelligence model that would surpass those of other companies. Thus far, Meta has a language model called Meta Llama 3 and Meta AI, which is similar to ChatGPT.

Zuckerberg also highlighted ways to expand the company’s place in the mixed-reality market, revealing that he was considering headset development for specific purposes such as exercise or work activities. Investors likely found Zuckerberg’s focus to be off due to the massive amounts of losses that the company’s Reality Labs has incurred over the last several years. The unit brought in $440 million in sales during the first quarter of 2024 but reported losses totaling $3.85 billion.

Since 2020, the unit has lost over $45 billion. Zuckerberg said that putting resources into AI would grow Meta’s “investment envelope meaningfully.” The company believes it will spend between $35 billion and $45 billion in 2024 for the endeavor, which is higher than its initial projection. One media outlet said that Zuckerberg was prepared for investors to dump the stock after he revealed the company’s shift in focus, noting that he believes the investment will pay off in the long run.