Topline
Meta smashed Wall Street’s expectations again in its first-quarter earnings report Wednesday afternoon, but it said it expects growth to slow considerably, which sent its stock spiraling.
Meta CEO Mark Zuckerberg cheers at a UFC event in February
Key Facts
Meta brought in $36.46 billion in sales during the period, easily beating estimates of $36.14 billion and coming in 27% higher than the same period last year.
Its $4.71 earnings per share shattered forecasts of $4.32 earnings per share, and its $12.4 billion net income compared favorably to projections of $11.4 billion.
The first-quarter results are impressive, but investors reacted sourly as Meta said it expects $36.5 billion to $39 billion in second-quarter sales, with the midpoint guidance of $37.8 billion well below average analyst estimates of $38.3 billion, according to FactSet.
The company also raised its for full-year expense outlook, citing growing costs in its disfavored metaverse segment, cutting into the efficient growth story which boosted Meta’s stock over the last year-and-a-half.
Shares of Meta fell 10% in limited afternoon trading, hovering at about $440 per share, which would be its lowest price since Feb. 1 should the losses hold into Thursday’s regular session.
Key Background
As a reminder, Meta is an advertising company, not a social media or metaverse one, at its core; ads account for about 99% of Meta’s overall revenues. Meta’s robust growth during the first quarter reflects the social media giant’s dramatic recovery in recent years. After posting five consecutive quarters of negative year-over-year earnings growth from 2021’s fourth quarter to 2022’s fourth quarter, Meta has returned to eye popping profitability. After sinking from Sept. 2021’s then-record of over $380 per share to below $90 by Nov. 2022, Meta’s stock remarkably hit a new all-time high of $531 earlier this month. For those keeping score at home, that’s a drawdown of about 80% over the course of 14 months, followed by a more than 500% rally over the next 17 months. Meta, which rebranded from Facebook in 2021, experienced its initial selloff amid a broader stock market selloff and as investors panned the company’s cash-burning expansion into augmented and virtual reality, or the metaverse. Its recovery came as ad spending proved resilient as the U.S. avoided entering the brutal economic downturn many forecasted and as the market enjoyed gains, but Meta has proven specifically attractive for its commitment to keeping costs down while substantially growing its top line.
Surprising Fact
Meta reported another $3.8 billion loss in its metaverse division last quarter, extending the unit’s operating loss to some $37 billion during its 2.5-year existence.
Big Number
$172.7 million. That’s how much Zuckerberg, who owns about 13% of Meta, will get paid by his company in its next dividend payment thanks to his 345.5 million shares in the company. It’s a massive coup for Zuckerberg, who made a meager $1 salary and $24.4 million in additional compensation in 2023, the latter of which was largely attributed to security for him and his family.
Forbes Valuation
Zuckerberg’s nine-figure dividend payment is a drop in the bucket compared to his broader fortune, which Forbes valued at roughly $173 billion as of Wednesday’s market close, making him the fourth-richest person on the planet. He’s more than $125 billion richer than he was at the end of 2022, when he was merely the 26th-wealthiest human, a rise owed to Meta stock’s rapid recovery.
