Meta Platforms stock plunged and the company lost billions of dollars in value as investors rushed to sell shares early Thursday after the tech giant shocked investors with plans to spend even more aggressively on artificial intelligence.
Meta Platforms stock plunged after revealing plans to spend even more aggressively on AI.
Meta stock dropped 13% in premarket trading following the company’s results late Wednesday. The company’s market capitalization as of Wednesday’s close stood at $1.25 trillion, with the premarket decline in the share price implying a new market cap of $1.09 trillion—a loss of $160 billion in value.
While Meta beat Wall Street’s expectations for first-quarter profit and revenue, it disappointed investors with its outlook for the second quarter, forecasting revenue in a range that was slightly shy of the analyst consensus.
Since advertising remains a core revenue driver for Meta, the weaker revenue guidance could be weighing on other ad-driven internet companies. Shares in Snapchat owner Snap fell 4.7% in the premarket session while Pinterest stock was down 3.9%.
But the bigger shocker was the big spending plans for AI, as Meta raised its forecast for full-year capital expenditures to a range of $35 billion to $40 billion, up from a prior range of $30 billion to $37 billion.
Higher spending comes “as we continue to accelerate our infrastructure investments to support our artificial intelligence (AI) roadmap,” Meta said in its earnings release. The parent of Facebook and Instagram added that capex likely would continue to increase in 2025 “as we invest aggressively to support our ambitious AI research and product development efforts.”
This isn’t the first time that Meta stock has fallen dramatically on the back of revenue worries and plans to spend big on a hot tech trend.
The premarket price action sets Meta shares up for one of the worst days in years, or at least since Oct. 27, 2022, when the stock plunged 25% following weaker revenue and aggressive spending projects focused on the metaverse and virtual reality. With Meta stock up some 140% over the past year, however, Thursday risks ushering in the company’s largest-ever one-day loss in market capitalization.
Declines in Meta stock will be felt keenly by CEO Mark Zuckerberg, whose position as the world’s fourth-richest man—with a fortune estimated at $175 billion—largely is a result of his 13% or so stake in Meta, according to the Bloomberg Billionaires Index.