Mark Zuckerberg, CEO of Meta testifies before the Senate Judiciary Committee at the Dirksen Senate Office Building on January 31, 2024 in Washington, DC.
Alex Vuong | beautiful images
Mark Zuckerberg started Metaits earnings call by talking about artificial intelligence. He then moved into the metaverse, introducing his company’s headsets, glasses, and operating system. He spent almost his entire opening speech focusing on the many ways Meta lost money.
Investors don’t care about it. Meta shares fell as much as 19% in extended trading on Wednesday, wiping out more than $200 billion in market capitalization. The drop comes despite Meta Report First quarter profits and revenue were better than expected.
Zuckerberg seems ready for a sell-off.
“I think it’s worth pointing out, that historically we’ve seen a lot of volatility in our stock during this period of the product playbook, when we’re Investing in scaling a new product but not making money from it yet.” . He cited previous efforts like short video service Stories, Stories, and the transition to mobile.
Meta generates 98% of its revenue from digital advertising. When it comes to advertising, however, Zuckerberg is looking to the future and the ways the company can turn current investments into ad dollars. When discussing Meta’s efforts to build a “leading AI,” Zuckerberg said: “There are a number of ways to build a big business here including scaling enterprise messaging, introducing advertising or paid content into AI interactions.”
He spends more time talking about Meta Llama 3, the company’s latest major language model, and recently deployed by Meta AI, the company’s answer to OpenAI’s ChatGPT.
Zuckerberg then turned to potential opportunities to expand the mixed reality headset market, such as work or fitness headsets. Meta Access has been opened to the operating system that powers the Quest headset on Monday, which Zuckerberg said will help the mixed reality ecosystem grow faster.
He also talked about Meta’s AR glasses, which he called “the ideal device for AI assistants because you can show them what you see and hear what you hear.”
Ray-Ban Meta Headliner smart glasses.
Jake Square | CNBC
Meanwhile, Meta Practical laboratory, which houses the company’s hardware and software to develop the nascent metaverse, continues to bleed cash. Reality Labs reported revenue of $440 million in the first quarter and a loss of $3.85 billion. This division’s accumulated losses since the end of 2020 amounted to 45 billion USD.
Zuckerberg bought himself some time.
Meta’s stock price nearly tripled last year and as of Wednesday’s close was up 40% in 2024. It hit a record $527.34 in early April.
After one brutal 2022As the company lost about two-thirds of its value, Zuckerberg appeared to have regained Wall Street’s trust.
The driving force behind this recovery is the cost-cutting plan that Zuckerberg laid out early last year, when he told investors that 2023 would be the year “year of efficiency.” The company has cut headcount and eliminated unnecessary projects in a bid to become a “stronger and more agile organization”.
Zuckerberg said Wednesday that the company will continue to operate efficiently, but shifting existing resources to invest in AI will “meaningfully broaden the scope of our investments.”
Meta said.
Zuckerberg said he expected to see a “multi-year investment cycle” before Meta’s AI products scale into profitable services, but noted that the company has a “strong track record” in that field.
Meta CFO Susan Li echoed Zuckerberg’s comments and said the company needs to develop advanced models and scale products before they deliver significant revenue.
“Despite the huge long-term potential, we are only at a much earlier stage of the profitability curve,” Li said.
Even before the call began, investors were cutting their holdings. That’s because Meta gave soft revenue guidance for the second quarter, overshadowing the first quarter’s pace.
As the stock’s decline deepened, Zuckerberg told investors that if they were willing to go for the ride, they might be rewarded.
“Historically, investing to build these new experiences at scale in our apps has been a very good long-term investment for us as well as for the investors who have been engaged,” Zuckerberg said. with us and the initial signs are also quite positive here.” “But building a top-notch AI will also be a bigger undertaking than the other experiences we’ve added to our app, and it will likely take several years.”
CLOCK: AI is not yet a “support” for Meta as Wall Street expected
