Meta Stock Tanks 10% Despite Earnings Beat

Meta, formerly known as Facebook, faced a tumultuous day in the stock market despite delivering impressive first-quarter results that beat Wall Street’s expectations. The company’s stock plummeted by 10% in afternoon trading following its earnings report, with shares hovering around $440 per share, marking the lowest price since February 1st. This decline came as a surprise to many, considering Meta’s strong financial performance in the first quarter.

In its earnings report, Meta reported sales of $36.46 billion, exceeding analysts’ estimates and representing a 27% increase from the same period last year. The company also reported earnings per share of $4.71, well above the forecasted $4.32, and a net income of $12.4 billion, surpassing expectations of $11.4 billion. Despite these impressive figures, investors reacted negatively to Meta’s guidance for the second quarter, which fell short of analyst estimates.

Meta expects second-quarter sales to range between $36.5 billion and $39 billion, with a midpoint guidance of $37.8 billion, below the average analyst estimate of $38.3 billion. This outlook, along with the company’s revised full-year expense outlook, which cited growing costs in its metaverse segment, contributed to the stock’s decline.

Meta’s strong performance in the first quarter is a testament to its recovery following a challenging period. The company faced significant declines in its stock price from September 2021 to November 2022, with the stock dropping from a record high of over $380 per share to below $90. However, Meta’s stock remarkably rebounded, reaching a new all-time high of $531 earlier this month, reflecting its resilience and ability to adapt to changing market conditions.

It’s important to note that Meta is primarily an advertising company, with ads accounting for about 99% of its overall revenues. Despite facing challenges in its metaverse segment, Meta’s core advertising business has remained strong, contributing to its overall financial performance.

CEO Mark Zuckerberg, who owns about 13% of Meta, is set to receive a significant dividend payment thanks to his shares in the company. Despite this setback in the stock price, Zuckerberg’s wealth remains substantial, with his net worth valued at roughly $173 billion, making him the fourth-richest person in the world. His success is a testament to Meta’s ability to deliver value to its shareholders and adapt to the ever-changing landscape of the tech industry.