Meta shares drop after warning of weak revenue growth, higher AI expenses

Published

1 year ago

April 25, 2024

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Meta Platformsdisappointed investors on Wednesday with forecasts of higher expenses and lighter than expected revenue, evaporating $200 billion in stock market value and raising fears that the surging cost of AI is outpacing its benefits.

Shares of the Facebook and Instagram parent dropped about 15% in extended trade following the report, with its market capitalization plunging to about $1 trillion. Alphabetshares fell 3%, Snapshares fell more than 6% and Microsoftshares fell 2%.

Meta said it expects April-June revenue in the range of $36.5 billion-$39 billion, with a midpoint of $37.8 billion, compared with analysts’ estimates of $38.3 billion, according to LSEG data.

The company raised its forecast for expenses this year to support investments in new AI products and the computing infrastructure needed to support them, while adding that it expected spending would continue to increase next year.

It raised its 2024 total expense forecast to $96 billion-$99 billion, from $94 billion to $99 billion. It also expects 2024 capital expenditure to fall within a range of $30 billion-$40 billion, up from its earlier forecast of $35 billion to $37 billion, it said.

CEO Mark Zuckerberg told analysts on conference call that the “focus on AI will still grow our investment envelope meaningfully before we make much revenue from some of these new products.”

Zuckerberg’s comments and the quarterly results tempered expectations for Meta’s artificial-intelligence investments after a series of smash-hit quarters for the social media giant. Meta enjoyed thebiggest one-day gain in market capitalization in Wall Street historyafter its last quarterly report, when it posted robust results and announced a first-ever dividend.

“Investors are skeptical of the growing AI spending. Some of those investments could take years to pay off,” said Jasmine Enberg, principal analyst at Insider Intelligence.

“But Meta is in the AI race to win it, and Meta AI could be a dark horse. It has a built-in audience through its existing apps, and it will have an advantage in eventual monetization through its ad ecosystem,” Enberg said.

The company has been updating its ad-buying products with AI tools and short video formats to boost revenue growth, while also introducing new AI features like a chat assistant to drive engagement on its social media properties.

It announced last week that it isgiving its Meta AI assistant more prominent billingacross its suite of apps, meaning it will start to see how popular the product is with users in the second quarter.

“For all Meta’s bold AI plans, it can’t afford to take its eye off the nucleus of the business its core advertising activities,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

The company also benefits from regulatory pressures bearing down on its Chinese-owned short video competitor TikTok, which isfacing the threat of a US ban.

Meta posted first-quarter revenue of $36.5 billion, roughly in line with expectations of $36.2 billion, according to LSEG data.

Meta’s daily active people (DAP), a metric it uses to track unique users of any one of its apps Facebook, Instagram, Messenger or WhatsApp in a day, grew 7%.

DAP grew 8% in the preceding quarter.

Meta disclosed only the DAP figure for user growth, a first for the company. It said earlier this year that it would no longer break out numbers for flagship social network Facebook, whose growth has slowed in recent years.

Politics

Why Boris’s best mate is off to Reform

Published

2 hours ago

July 10, 2025

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👉Listen to Politics at Sam and Anne’s on your podcast app👈       

Former Conservative chairman and friend of Boris Johnson – Sir Jake Berry – is defecting to Reform UK, causing more problems for Tory leader Kemi Badenoch.

On today’s episode, Sky News’ Sam Coates and Politico’s Anne McElvoy discuss if his defection will divide parts of Reform policy.

Elsewhere, the Anglo-French summit gets under way, with Prime Minister Sir Keir Starmer hoping to announce a migration deal with French President Emmanuel Macron to deter small boat crossings.

Plus, chatter around Whitehall that No10 are considering a pre-summer reshuffle, but will it have any value?

US

Donald Trump praises Liberian president’s English – the country’s official language

Published

2 hours ago

July 10, 2025

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Donald Trump praises Liberian president's English - the country's official language

Donald Trump has praised the Liberian president’s command of English – the West African country’s official language.

The US president reacted with visible surprise to Joseph Boakai’s English-speaking skills during a White House meeting with leaders from the region on Wednesday.

After the Liberian president finished his brief remarks, Mr Trump told him he speaks “such good English” and asked: “Where did you learn to speak so beautifully?”

Mr Trump seemed surprised when Mr Boakai laughed and responded he learned in Liberia.

The US president said: “It’s beautiful English.

“I have people at this table who can’t speak nearly as well.”

Mr Boakai did not tell Mr Trump that English is the official language of Liberia.

The country was founded in 1822 with the aim of relocating freed African slaves and freeborn black citizens from the US.

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Mr Trump promised the leaders of Liberia, Senegal, Gabon, Mauritania and Guinea-Bissau a pivot from aid to trade at the surprise meeting.

He described the countries as “all very vibrant places with very valuable land, great minerals, and great oil deposits, and wonderful people”.

Later asked by a reporter if he’ll visit the continent, Mr Trump said, “At some point, I would like to go to Africa.”

But he added that he’d “have to see what the schedule looks like”.

Trump’s predecessor, President Joe Biden, promised to go to Africa in 2023, but only fulfilled the commitment by visiting Angola in December 2024, just weeks before he left office.

US

Gaza permanent ceasefire ‘questionable’, says Israeli government

Published

2 hours ago

July 10, 2025

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Gaza permanent ceasefire 'questionable', says Israeli government

The Israeli government believes the chances of achieving a permanent ceasefire in Gaza are “questionable”.

The pessimistic assessment, in a top-level Israeli government briefing given to Sky News, comes as the Israeli Prime Minister prepares to leave Washington DC after a four-day visit which had begun with the expectation of a ceasefire announcement.

Benjamin Netanyahu will leave the US later today with the prospect of even a temporary 60-day ceasefire looking extremely unlikely this week.

Within “a week, two weeks – not a day” is how it was framed in the background briefing late on Wednesday.

Crucially, though, on the chances of the ceasefire lasting beyond 60 days, the framing from the briefing was even less optimistic: “We will begin negotiations on a permanent settlement. But we achieve it? It’s questionable, but Hamas will not be there.”

Sky News has spoken to several Israeli officials at the top level of the government. None will be drawn on any of the details of the negotiations over concerns that public disclosure could jeopardise their chances of success.

But I have been given a very clear understanding of Mr Netanyahu’s thinking.

The Israeli position is that a permanent ceasefire (beyond the initial 60 days, which itself is yet to be agreed) is only possible if Hamas lays down its arms. “If they don’t, we’ll proceed [with the war],” said a source.

The major sticking point in the talks between Hamas and Israel is the status of the Israel Defence Forces (IDF) inside Gaza during the 60-day ceasefire and beyond, should it last longer.

The latest Israeli proposal, passed to Hamas last week, included a map showing the proposed IDF presence inside Gaza during the ceasefire.

This was rejected by Hamas and by Trump’s Middle East envoy, Steve Witkoff, who reportedly told the Israelis that the redeployment map “looks like a Smotrich plan”, a reference to the extreme-right Israeli finance minister, Bezalel Smotrich.

My briefing of Mr Netanyahu’s position is that he has not shifted in terms of Israel’s central stated war aims. The return of the hostages and eliminating Hamas are the key objectives.

But in a hint of how hard it will be to reconcile the differences, it was clear from my briefing that no permanent ceasefire is possible in the Israeli government’s view without the complete removal of Hamas as a political and military entity.

Hamas is not likely to negotiate its way to oblivion.

On the status of the Israeli military inside Gaza, a senior Israeli official told Sky News: “We would want IDF in every square metre of Gaza, and then hand it over to someone.”

It was clear to me that Mr Netanyahu wants his stated position to be that his government has no territorial ambition for Gaza.

One quote to come from my briefing, which I am only able to attribute to a senior Israeli official, says: “[We] don’t want to govern Gaza… don’t want to govern, but the first thing is, you have to defeat Hamas.”

Another clear indication of Mr Netanyahu’s position – a quote from the briefing, attributable only to a senior Israeli official: “You cannot have victory if you don’t clear out all the fighting forces.

“You have to go into every square inch unless you are not serious about victory. I am. We are going to defeat them. Those who do not disarm will die. Those who disarm will have a life.”

On the future of Gaza, it’s clear from my briefings that Mr Netanyahu continues to rule out the possibility of a two-state solution “for the foreseeable future”.

The Israeli government assessment is that the Palestinians are not going to have a state “as long as they cling to that idea of destroying our state”.

On the most controversial aspect of the Gaza conflict – the movement of the population – the briefing revealed that Mr Netanyahu’s view is that 60% of Palestinians would “choose to leave” but that Israel would allow them to return once Hamas had been eliminated.

“It’s not forcible eviction, it’s not permanent eviction,” a senior Israeli official said.

Critics of Israel’s war in Gaza say that any removal of Palestinians from Gaza, even if given the appearance of being “voluntary”, is in fact anything but, because the strip has been so comprehensively flattened.

Reacting to Israeli Defence Minister Katz’s recent statement revealing a plan to move Palestinians into a “humanitarian city” in southern Gaza, and not let them out of that area, the official wouldn’t be drawn, except to say: “As a permanent arrangement? Of course not.”