Meta Platforms Inc., the parent company of social media giants Instagram and Facebook, posted strong results for the quarter ending March 2024. The company's earnings increased significantly, mainly mostly to an increase in advertising income. It reported a 6% increase in average ad costs across its platform.
Meta's earnings from January to March more than doubled, hitting $12.37 billion, or $4.71 per share, up from $5.71 billion, or $2.20 per share, in the same time previous year.
Meanwhile, sales increased by 27 percent to $36.46 billion, up from $28.65 billion the year before. Meta expects sales in the following quarter to range between $36.5 billion and $39 billion. According to AP, analysts expect second-quarter sales of $38.25 billion, which exceeds the midpoint of Meta's expected range.
Meta also stated that it expects greater capital costs in 2024, particularly due to increasing investments in artificial intelligence. The business now expects spending between $35 billion and $40 billion, up from its earlier estimate of $30 billion to $37 billion.
On NASDAQ, though, the computer giant's shares saw a precipitous decline of more than 15%.
Thomas Monteiro, senior analyst at Investing.com, stated, "Meta's earnings should serve as a stark warning for companies reporting this earnings season." "While the business exceeded projections in both top- and bottom-line measures, the stated reduction in sales forecasts for Q2 was more significant. This completely contradicts Tesla's actions from yesterday and indicates that investors are now viewing the near future with a great deal of skepticism.
The IT giant's shares have provided multibagger returns of 137% on NASDAQ annually.
