Meta's share price has dropped 16%, which reduced the company's value by $200 billion USD.
👉 Background: Meta, owner of Facebook, Instagram and Whatsapp, is also the name behind the $46 billion investment in the Metaverse - without much to show for it. So Meta made some major changes, cutting more than 11,000 staff and shifting focus to AI, which pleased investors.
👉 What happened: Meta has announced revenue of $36.4 billion USD in its quarterly results, but despite that its share price has dropped 16%, which reduced the company's value by $200 billion USD.
👉 What else:. The share drop was a result of an increase in spending on its AI investment. Meta now expects to spend $40 billion USD on AI investments, up from a top-end forecast of $37 billion USD.
💡With big investments come even bigger investor expectations.
💡Investors struggle to get excited by big investments, like AI, when the CEO warns they aren't expected to make much revenue from that investment in the short term.
💡 Meta's history of large investments has been mixed. When Meta invested in mobile apps, investors were sceptical, but it did pay off - unlike Meta's investment in the Metaverse, which has only produced no-legged-metaverse-avatars so far.
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