Facebook -- META -- Higher Losses For Longer -- April 30, 2024

Locator: 47107TECH.

Link here.

I don't follow META - Facebook very closely -- but this is very interesting. This may be an interesting ticker to follow. I don't invest in META and have no plans to do so. No recommendation. See disclaimers.

The takeaways for me:

• AI is here to stay;
• content providers are going to spend a lot of money on chips;

Out on a limb:

• does Zuckerberg know something the rest of us don't know?
• is AI an existential issue for some content providers?
• implications for AAPL? In a bad way.
  

Look at the story at the link:

Facebook owner Meta registered nearly $4 billion in losses for its metaverse and AI research wing in the first quarter, with the company’s stock crashing by more than 11 percent in a single day.

Meta's “Reality Labs” division suffered massive losses.

Reality Labs is the company’s research and development wing focusing on immersive technologies like metaverse, virtual reality, and AI.

Reality Labs registered a loss of $3.84 billion between January and March 2024 against a revenue of just $440 million.

Meta began reporting Reality Labs as a separate business segment at the end of 2020. Since then, losses from the segment have exceeded $45 billion.

Mark Zuckerberg suggested that the firm could continue suffering losses for some more time in its AI efforts. More investments will be required before Meta makes “revenue from some of these new products” like AI, he said. 

Meta reported a 27 percent increase in revenue and a 117 percent jump in net income for the quarter compared to first quarter 2023.

However, the chief executive’s comments that Reality Labs’ endeavors will take more time to become profitable negatively affected investor sentiment, especially since the sector has already seen billions of dollars in losses.

Meta’s market capitalization at the end of Wednesday was $1.27 trillion. During Thursday morning trading, its market cap declined to $1.10 trillion—a wipeout of $170 billion in value.

The earnings report also predicted higher expenses for Reality Labs moving forward.