Meta Just Lost $200 Billion In Value

Meta shares took a nosedive despite exceeding profit and revenue expectations for Q1. The drop came after Mark Zuckerberg spent his earnings call hyping the company’s future in artificial intelligence (AI) and the metaverse, projects that currently generate significant losses.

Investors were unimpressed. Meta’s stock price tumbled nearly 20% in after-hours trading, wiping out over $200 billion in market value. This volatility wasn’t a surprise to Zuckerberg, who pointed to similar dips during past product rollouts like Reels and mobile integration.

Meta relies heavily on ad revenue, and Zuckerberg hinted at future monetization opportunities within AI. He discussed integrating ads into AI interactions and building a “leading AI” for business messaging. He also highlighted Meta Llama 3, their latest large language model, and the recent launch of Meta AI.

Beyond AI, Zuckerberg sees potential in the mixed reality headset market, proposing work and fitness-oriented devices. He also touted their AR glasses as ideal for AI assistants. However, Meta’s Reality Labs, the unit responsible for metaverse hardware and software, remains a financial black hole.

Despite these losses, Zuckerberg appears to have regained some investor confidence. Meta’s stock price tripled in 2023 thanks to aggressive cost-cutting measures. While the company will continue to focus on efficiency, Zuckerberg plans to significantly increase investments in AI. He anticipates a “multiyear investment cycle” before profitability, but remains confident in Meta’s long-term prospects.

CFO Susan Li echoed these sentiments, stressing the need for long-term development before AI products become revenue drivers. Investors, however, seemed wary. Meta’s conservative Q2 revenue forecast overshadowed the Q1 beat, leading to pre-call stock trimming.

As the sell-off intensified, Zuckerberg attempted to reassure investors. He cited past successes with new product integrations and expressed optimism about early signs with AI. However, he acknowledged the greater scale and extended timeline for building a leading AI compared to previous ventures.