Meta Falls Despite Surprise Earnings Due to Weak Outlook... Down 11% in After-Hours Trading

Q2 Sales Forecast at $37.7 Billion... Below Market Expectations

Meta, the parent company of Facebook, is plunging more than 10% in after-hours trading despite reporting better-than-expected first-quarter results this year, due to a disappointing earnings outlook.

On the 24th (local time), Meta announced that its first-quarter revenue increased 27% year-over-year to $36.46 billion, and net profit rose 117% to $12.37 billion. Earnings per share (EPS) were reported at $4.71.

These results exceeded analysts' expectations. Previously, LSEG had estimated Meta's revenue at $36.16 billion and EPS at $4.32.

However, the future earnings outlook fell short of market expectations, raising concerns about growth. Meta projected second-quarter revenue between $36.5 billion and $39 billion, with a midpoint of $37.75 billion, representing an 18% increase from a year earlier, but this is below the average analyst forecast of $38.3 billion.

Additionally, Meta's announcement of increased capital expenditures for artificial intelligence (AI) investments has dampened investor sentiment.

Meta stated on the day, "We will accelerate infrastructure investments to support our AI roadmap." Accordingly, capital expenditures for this year are expected to rise to $35 billion to $40 billion, up from the previous estimate of $30 billion to $37 billion.

Meanwhile, Meta's stock price fell 0.52% during regular trading hours and plunged 11.25% in after-hours trading following the earnings announcement.