Meta stock plunges 15.5%, loses $200 bn in value on higher expense projections

Shares of Mark Zuckerberg-led Meta Platforms slipped 15.57% in extended trade on Wednesday, wiping off around $200 billion from its market value, following the management's commentary suggesting higher expenses for the full year 2024 and continued losses at Reality Labs.

Despite beating expectations on Q1 earnings, Meta saw the second biggest one-day rout in its shares on Wednesday after a record $232 billion loss in m-cap on February 3, 2022.

The owner of Meta, Instagram, and WhatsApp, in its Q1 2024 earnings report, says its total revenue and revenue on a constant currency basis were $36.46 billion and $36.35 billion, respectively, both of which increased by 27% year-over-year. The company's net income for the said quarter was recorded at $12,369 million, more than double from $5,709 million in the same period last year.

Meta has said it is updating its ad-buying products with AI and has recently introduced AI features on its social platforms to boost engagement.

The company says it anticipates full-year 2024 capital expenditures will be in the range of $35-40 billion, increased from its prior range of $30-37 billion as it continues to accelerate infrastructure investments to support the artificial intelligence (AI) roadmap. "While we are not providing guidance for years beyond 2024, we expect capital expenditures will continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts."

"It's been a good start to the year," said Mark Zuckerberg, Meta founder and CEO. "The new version of Meta AI with Llama 3 is another step towards building the world's leading AI. We're seeing healthy growth across our apps and we continue making steady progress building the metaverse as well."

For the full-year 2024, Meta says its total expenses could be in the range of $96-99 billion, updated from its prior outlook of $94-99 billion due to higher infrastructure and legal costs. "For Reality Labs, we continue to expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts and our investments to further scale our ecosystem."

The social media behemoth says it continues to monitor an active regulatory landscape, including the increasing legal and regulatory headwinds in the EU and the U.S. that could "significantly impact" business and financial results.

As the race for dominance in the AI space gets tougher, Meta has been investing heavily in its AI-based projects. This week, Meta upped the AI game with the launch of the next version of his company's foundational open-source AI model, Llama 3.

Claimed to be the most capable openly available large language model (LLM) to date, Llama 3 comes up with two variants -- 8B and 70B models that can support a broad range of use cases. Meta says they come with "improved reasoning" and set a new "state-of-the-art" for models of their sizes.

Meta says it wants to kickstart the next wave of innovation in AI across the stack. With Llama 3, the company’s goal is to make Llama 3 "multilingual and multimodal", have longer context, and improve overall performance across core LLM capabilities such as reasoning and coding.