• Meta, led by CEO Mark Zuckerberg, experienced a significant drop in market value, losing over $200 billion in market capitalization.

• Meta’s decision to offload intellectual property rights to Faraway reflects a strategic shift towards prioritizing AI investments and metaverse development.

• Zuckerberg and Meta CFO Susan Li stress the importance of patience and long-term vision.

Meta CEO Mark Zuckerberg rattled investors during the company’s quarterly earnings call by emphasizing its long-term investments in AI and the metaverse. Despite reporting better-than-expected profit and revenue for the first quarter, Meta’s shares plummeted up to 19% in extended trading on Wednesday, wiping out over $200 billion in market capitalization.

Meta Loses $200 Billion in Value Due to AI Investments

Zuckerberg commenced Meta’s earnings call with a discussion on artificial intelligence, swiftly transitioning to the metaverse and highlighting the company’s headsets, glasses, and operating system. However, he predominantly focused on elucidating the various avenues through which Meta incurs losses.

The market’s reaction was starkly negative. Zuckerberg acknowledged the stock’s historical volatility during phases of product expansion, referencing past endeavours such as Reels, Stories, and the shift to mobile.

Despite Meta’s heavy reliance on digital advertising, Zuckerberg’s discourse on ads primarily centred on prospects for monetization. He underscored the potential of leveraging Meta’s investments into revenue streams, including scaling business messaging and integrating ads into AI interactions.

Zuckerberg dedicated significant attention to Meta Llama 3, the company’s latest large language model, and the recent launch of Meta AI, positioned as a competitor to OpenAI’s ChatGPT.

 Expounding on opportunities in the mixed-reality headset market, he discussed plans for workplace and fitness-oriented headsets. Meta’s decision to open access to the operating system powering its Quest headsets was highlighted as a move to accelerate the growth of the mixed-reality ecosystem.

The discussion extended to Meta’s AR glasses, hailed by Zuckerberg as optimal for AI assistance due to their capability to perceive and transmit sensory data. Nevertheless, Meta’s Reality Labs unit, responsible for metaverse development, continues to suffer substantial losses, reporting $3.85 billion in losses for the first quarter alone, contributing to cumulative losses exceeding $45 billion since the end of 2020.

Despite Meta’s tumultuous stock performance in 2022, experiencing a significant decline in value, Zuckerberg’s cost-cutting initiatives in 2023 led to a remarkable recovery, with Meta’s stock nearly tripling in value and rising by 40% in 2024.

 Emphasizing efficiency, Zuckerberg reiterated Meta’s commitment to AI investments, projecting capital expenditures between $35 billion and $40 billion for 2024, aimed at bolstering the company’s AI infrastructure.

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Both Zuckerberg and Meta CFO Susan Li emphasized the necessity of developing advanced AI models and scaling products before realizing substantial revenue. While acknowledging the long-term potential, they cautioned investors about the extended timeline for profitability.

Investor apprehension was further fueled by Meta’s conservative revenue forecast for the second quarter. Nonetheless, Zuckerberg expressed confidence in the long-term viability of Meta’s AI investments, urging investors to remain patient and highlighting the historical success of scaling new experiences within Meta’s apps.

the response was unequivocally negative. Zuckerberg acknowledged the stock’s historical volatility during phases of product expansion, drawing parallels with past endeavours such as Reels, Stories, and the company’s transition to mobile platforms.

Despite Meta’s heavy reliance on digital advertising, Zuckerberg’s discussion on ads primarily revolved around future monetization prospects. He emphasized Meta’s potential to convert its investments into revenue streams by scaling business messaging and integrating ads into AI interactions.

Significant emphasis was placed on Meta Llama 3, the company’s latest large language model, and the recent launch of Meta AI, which was positioned as a competitor to OpenAI’s ChatGPT.

Delving into opportunities in the mixed-reality headset market, Zuckerberg outlined plans for workplace and fitness-oriented headsets. Meta’s decision to grant access to the operating system powering its Quest headsets was highlighted as a strategic move to accelerate the growth of the mixed-reality ecosystem.

The discourse expanded to Meta’s AR glasses, hailed by Zuckerberg as the quintessential device for AI assistance due to its ability to perceive and transmit sensory data. Despite Zuckerberg’s optimism, Meta’s Reality Labs unit, responsible for metaverse development, continues to suffer significant losses, with a reported $3.85 billion loss for the first quarter alone, contributing to cumulative losses exceeding $45 billion since the end of 2020.

Despite Meta’s turbulent stock performance in 2022, experiencing a notable decline in value, Zuckerberg’s cost-cutting measures in 2023 led to a remarkable recovery, with Meta’s stock nearly tripling in value and rising by 40% in 2024.

 Reinforcing the company’s commitment to efficiency, Zuckerberg reiterated Meta’s focus on AI investments, projecting capital expenditures between $35 billion and $40 billion for 2024, aimed at bolstering the company’s AI infrastructure.

Both Zuckerberg and Meta CFO Susan Li stressed the importance of developing advanced AI models and scaling products before realizing significant revenue. While acknowledging the long-term potential, they cautioned investors about the prolonged timeline for profitability.

Investor concerns were exacerbated by Meta’s conservative revenue forecast for the second quarter. Nonetheless, Zuckerberg expressed confidence in the long-term viability of Meta’s AI investments, urging investors to remain patient and highlighting the historical success of scaling new experiences within Meta’s apps.

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As Meta embarks on its journey to establish itself as a leader in AI, Zuckerberg cautioned that this endeavour would require several years to materialize fully. Despite the challenges ahead, he remained optimistic about the prospects for both Meta and its investors in the evolving landscape of digital technology.