25 April 2024
If you are covering Meta’s latest financial results, please find below a comment from Ben Barringer, technology analyst at Quilter Cheviot:
“Meta has become a victim of its own recent success as its latest results disappoint investors. Despite the stock being down 15% after hours, nothing has fundamentally changed for Meta, but there was enough in the results statement to put a brake on its recent rise.
“Meta has done a really good job in the past 12-18 months to change the narrative around the business. However, analysts were expecting more than 27% revenue growth, and were hoping for better guides into the future. Meta had also appeared to get its costs under control, so a fresh announcement of investment into AI will spook investors, especially given the concerns they had with the amount of money being ploughed into the Metaverse.
“Meta can be an AI winner, so the increasing in investment makes sense here. The products it can offer consumers and small businesses could be endless, so it should do well over the long-term. Nevertheless, it is still early days and that is what will worry investors – how much more will the business need to invest to stay ahead of the game?”
“The problem facing Meta, and other members of the Magnificent Seven, is that the bar is getting higher and higher. At some point good, solid results will no longer be enough to satisfy the market and that is when the bubble may pop. This earnings season will be interesting to see if it is a sector wide trend of deceleration, or if there truly are just one or two winners of the AI race.”
