Technology
Thursday, April 25th, 2024 2:07 pm EDT
Key Points
- Stock Performance: Meta shares fell by 14% on Thursday morning due to weak revenue guidance, resulting in a significant market cap loss of approximately $173 billion from its previous closing price.
- Earnings Report: Despite the stock drop, Meta reported earnings per share of $4.71 on revenue of $36.46 billion for the quarter, surpassing analysts’ expectations.
- Analyst Ratings and Commentary: Analysts expressed varied sentiments about Meta’s future, with JPMorgan analysts maintaining an overweight rating and highlighting the company’s heavy investments in AI. Bernstein analysts retained an outperform rating but lowered their price target, describing Meta’s current strategy as an “expensive offensive” with a longer payback period. Barclays analysts also maintained an overweight rating and lowered their price target, expressing confidence in Meta’s ability to navigate technological shifts despite anticipating challenges in revenue growth for the remainder of 2024.
Meta experienced a significant drop in shares by 14% following the release of weaker revenue guidance, casting a shadow over its first-quarter earnings beat. Despite reporting earnings per share of $4.71 on revenue of $36.46 billion, surpassing analysts’ expectations, the stock plummeted, erasing around $173 billion in market cap from its previous closing price. CEO Mark Zuckerberg’s discussion on investing in areas like artificial intelligence and mixed reality, which are not currently profitable, contributed to the sell-off during extended trading. Meta’s second-quarter revenue forecast of $36.5 billion to $39 billion fell short of analysts’ average estimate of $38.3 billion. While JPMorgan analysts maintained an overweight rating for Meta, they revised their price target down to $480, highlighting the company’s heavy AI investments. Similarly, Bernstein analysts, retaining an outperform rating, lowered their price target to $565, describing Meta’s business strategy as an “expensive offensive” with a longer payback. Barclays analysts, while also maintaining an overweight rating, adjusted their price target to $520, expressing confidence in Meta’s ability to navigate platform shifts in technology despite anticipating a challenging revenue growth trajectory for the remainder of 2024. Overall, analysts’ sentiments vary, with some emphasizing Meta’s potential for long-term success under Zuckerberg’s leadership, while others acknowledge the uncertainties and challenges ahead.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/25/meta-stock-down-15percent-on-weak-revenue-forecast.html
