Meta’s stock plummeted during Wednesday’s after-hours trading session, as investors expressed concern over increased spending on AI and the Metaverse.
Meta shares took a staggering nosedive, plunging as much as 19 percent on Wednesday, after Mark Zuckerberg disclosed that the company was poised to hemorrhage tens of billions of dollars into his ambitious undertakings.
The tech titan’s revelation that the foray into AI and the metaverse would devour as much as $40 billion of cash in 2024 sent shockwaves through the market, resulting in a gut-wrenching loss of over $200 billion in Meta’s market value.
For Zuckerberg, the metaverse represents a vision of a virtual reality universe accessed through the company’s immersive devices like headsets and glasses. However, despite his enthusiasm, the metaverse has failed to captivate consumers or garner significant interest from businesses.
Zuckerberg’s disclosure came during a dialogue with analysts and investors following the release of Meta’s earnings report for the first quarter of the year. While the company reported a surge in profits, exceeding expectations, concerns mounted over heightened spending and a projected downturn in advertising revenue for the second quarter.
The sharp decline in Meta’s stock price rattled investors, with shares tumbling from $493 to as low as $407 in after-hours trading, fueled by apprehensions surrounding escalating expenditures.
The fallout extended beyond the stock market, denting Zuckerberg’s personal fortune, which reportedly shrank by over $20 billion, reducing his net worth from a staggering $166 billion.
Despite the financial turbulence, Meta recorded robust revenues of $29.2 billion for the first quarter, marking a 27 percent increase compared to the previous year. Profits soared to $10 billion, more than doubling from the year before.
Zuckerberg sought to assuage investors’ concerns, emphasizing the company’s strategic investments in AI and the metaverse. He urged patience, acknowledging the inherent volatility associated with introducing new products that may not immediately generate revenue.
The path to AI supremacy is no small feat, Zuckerberg noted, conceding that developing a leading AI platform would require several years of dedicated effort.
Last week, Meta unveiled its latest AI iteration, Meta AI, which has been integrated as an enhanced smart assistant across its suite of apps, including Instagram, WhatsApp, Messenger, and Facebook. Powered by LLaMA 3, Meta’s most advanced language model, the AI technology is being deployed in numerous English-speaking countries.
Amidst Meta’s technological pursuits, Zuckerberg himself has undergone a transformation, shedding his trademark casual attire for a more polished image, complete with fur coats and diamond chains. The unveiling of his rugged new look, courtesy of Meta’s AI-generated persona, sparked widespread fascination and amusement among the public.
As Meta navigates the turbulent waters of innovation and investment, the tech industry watches closely, with the race for AI dominance intensifying among giants like Microsoft. For Zuckerberg and Meta, the road ahead promises both challenges and opportunities as they strive to shape the future of technology and virtual reality.
