- Shares fall over 4% in pre-market trading
- Warns of 2025 jump in AI spending
- Third quarter revenue up 19% to $40.59 billion
Shares in Facebook-owner Meta Platforms (META:NASDAQ) fell over 4% to $566 in pre-market trading despite the US tech giant beating Wall Street expectations as revenue increased 19% to $40.59 billion for the three months ending 30 September.
Net income grew 35% to $15.7 billion from $11.6 billion a year earlier, equating to EPS (earnings per share) of $6.03 versus consensus forecasts of $5.25.
However, the company revealed daily users slightly below analysts’ expectations.
The company reported 3.29 billion daily users for the third quarter, up 5% year-on-year compared with analysts’ expectations of 3.31 billion.
Meta CEO Mark Zuckerberg added that the company will also need to spend more on AI: ‘Our AI investments continue to require serious infrastructure, and I expect to continue investing significantly there, too.’
Meta raised capital expenditure guidance for the 2024 financial year to between $38 billion and $40 billion, up from $37 billion to $40 billion previously.
EXPERT VIEW
Dan Coatsworth, investment analyst at AJ Bell commented: ‘The market is unforgiving of any AI-related company that fails to significantly outperform. Meta is the latest stock to feel the wrath of investors despite extending its track record of doing better than analyst forecasts on key financial measures.
‘Meta has now beaten revenue forecasts for eight quarters in a row and earnings for seven consecutive quarters. Under normal circumstances, such a run would be hailed as truly remarkable. Unfortunately, Meta’s latest results prompted a decline in its shares in pre-market trading as one key operating metric came up short.
‘It’s not simply enough for Meta to move ahead, it needs to stay in the fast lane as far as the market is concerned.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
