The stock of Meta Platforms (META) is down 13% after the technology giant delivered forward guidance that disappointed analysts and investors.
The company’s outlook and plunge in its share price overshadowed what was otherwise a strong quarterly print.
For the year’s first quarter, Meta reported earnings per share (EPS) of $4.71 U.S. versus $4.32 U.S. that was expected among analysts who track the company’s progress.
Earnings more than doubled from $2.20 U.S. per share a year ago.
Revenue in Q1 totaled $36.46 billion U.S. compared to $36.16 billion U.S. expected on Wall Street.
Sales were up 27% from a year earlier, representing the fastest rate of expansion for any quarter since 2021.
Looking ahead, Meta Platforms said that it expects sales in the current second quarter of $36.5 billion U.S. to $39 billion U.S.
The midpoint of the projected range, $37.75 billion U.S., would represent 18% year-over-year growth at the company.
However, the revenue outlook fell short of the consensus estimate of $38.3 billion U.S. among analysts.
The selloff in Meta’s stock accelerated during the earnings call as chief executive Mark Zuckerberg talked about growing investments in mixed reality and artificial intelligence (AI).
On the social media side of the business, Facebook’s daily users totaled 3.24 billion, a 7% increase from a year earlier.
Advertising revenue, which accounts for most of Meta’s business, jumped 27% in the first quarter to $35.64 billion U.S.
Meta has continued to actively control costs, reducing its headcount by 10% in the first quarter from a year earlier to 69,329 employees.
However, the company’s capital expenditures for 2024 are anticipated to be $35 billion U.S. to $40 billion U.S., an increase from a previous forecast of $30 billion U.S. to $37 billion U.S.
The increased capital spending is mostly due to growing outlays on AI technologies, said Zuckerberg.
The company’s Reality Labs unit, which houses its hardware and software projects, reported Q1 sales of $440 million U.S. and $3.85 billion U.S. in losses. Since 2020, Meta’s Reality Labs has lost $45 billion U.S.
Prior to today (April 25), Meta Platforms’ stock had risen 138% in the last 12 months to trade at $493.50 U.S. per share.
