[Financial Summary] Meta falls sharply by 13%, sales and profit increases are also sluggish

Sales compared to the same period last year$36.455 billion, up 27%Then,Increased sales and profits for 4 consecutive quartersIt became. Earnings per share were 4.71 dollars, which exceeded market expectations. Internet advertising, which is the main force, was strong, and restructuring effects also appeared, but sales forecasts for the second quarter were in the range of 36.5 billion to 39 billion dollars (median increase of 18% compared to the same period last year) and fell below market expectations of 38.24 billion dollars (median increase of 20% compared to the same period last year). What is the stock price13% super sharp drop。

The metaverse lost nearly $3.9 billion, and AI is driving ad growth
According to financial reports, the main advertising business revenue was 35.64 billion dollars, which was almost consistent with the forecast of 35.53 billion dollars. It was a 26.8% increase from the same period last year, exceeding the 24% increase in the previous quarter.

Strong demand for e-commerce and games was expected to boost Meta's first quarter earnings due to an increase in advertising revenue and improved work efficiency, but it accounts for about 10% of the company's advertising revenueSlower growth for Chinese advertisers is a potential riskIt is.

Reality Labs, which are responsible for developing software technologies such as virtual reality hardware and the metaverse,Record huge losses approaching 4 billion dollars for several consecutive quartersDoing it. Sales for the first quarter of the same division were 440 million dollars, which was lower than expected at 494 million dollars, an increase of about 30% from the same period last year, and operating losses were 3.85 billion dollars, but it was better than the loss of 4.31 billion dollars predicted by the market.

Guidance raised by 2 billion, and investment in AI development increased significantly
According to the company's financial results announcement, the first quarter was off to a good start. Family of Apps showed strong momentum and achieved significant results in long-term strategies related to artificial intelligence and the metaverse.

In addition to the fact that earnings for the next fiscal year fell below the midpoint of the guidance range, Meta revealed that total expenses for the full year would be between 96 billion dollars and 99 billion dollars due to an increase in infrastructure investment and litigation costs, and it was revised upward of 2 billion dollars from the previous forecast of 94 billion dollars, making it comparable to the lower end of the range.

The companyReality Labs' operating losses increased significantly compared to the previous yearThe forecast is shown once again, and due to the acceleration of infrastructure investment to support the AI roadmap, this year's capital investment forecast is from 30 billion to 37 billion dollars, which is the conventional guidanceSignificant increase from 35 billion to 40 billion dollarsThat's it. Capital investment is expected to continue to increase next year. The market is disgusted by future increases in investment burdens for artificial intelligence (AI) development.

What should I pay attention to in the future
Meta promotes AI research, bets heavily on the virtual reality meta-universe, and sells related hardware products such as headsets and devices, but since digital advertisements account for about 97% of the company's revenue throughout the year,How to keep advertising growingThere is no change that whether to do it is the market's biggest concern.

Meanwhile, Meta announced the “world's strongest open source large-scale language model” Llama 3 last week, upgraded the artificial intelligence assistant Meta AI, and announced that Meta Horizon OS, which is a mixed reality OS, will be open this week, etc.Large-scale AI initiativesIt is progressing, and the market is watching closely with concerns about huge expenses and costs.

According to the global investment research company Third Bridge, 2023 is defined as the “year of efficiency improvement” from restructuring cuts at the end of 2022, and Meta, which has undergone quite a major transformation in a relatively short period of time, has really picked up speed in terms of profit growth.

What is the view of Wall Street?
Analysts such as Wells Fargo and JPMorgan Chase have fully factored in Meta's first-quarter results that remain strong, and its high growth rateThere is a possibility that it will cool down in the next few quartersThere is, and I am concerned that new stimuli will be necessary in order to maintain the momentum of advertising.