Meta’s blowout year continues after the company reported another stellar financial quarter on Wednesday. Shares fell in after-hours trading.
Wall Street analysts had high expectations for the Instagram and WhatsApp parent company, projecting an 18% jump in sales year over year. The company reported $40.6bn in sales, a 19% increase year over year that outpaced investor expectations of $40.19bn. Meta, which saw a 25% jump in its share price over the past two months, reported $6.03 in earnings per share (EPS), surpassing Wall Street’s expectations of an EPS of $5.29.
The company reported that its number of daily users was worse than analysts expected, notching 3.29bn “daily active people” versus an anticipated 3.31bn.
“We had a good quarter driven by AI progress across our apps and business,” said Mark Zuckerberg, Meta’s chief executive, in the press release announcing the earnings. “We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses.” The company said it expects its revenue to grow to between $45bn and $48bn in the fourth quarter.
The social media firm has been ramping up its investment in AI, and analysts are bracing for a spike in company-wide spending as a result. Meta’s guidance indicated capital expenditure could hit between $38bn and $40bn in 2024 and reach up to $50bn in 2025. But that investment may already be paying off. Zuckerberg said that Meta AI is on track to be the most-used AI assistant in the world with nearly 500 million monthly active users. The button to access Meta AI has been built into the search bar in the Instagram and Facebook apps. The company released its latest AI model, called Llama 3.1 405B, in July. Earlier this month, it announced an AI video maker, Movie Gen, that can generate footage with sound.
The company is also expanding its hardware line. At its annual developer conference in September, Meta debuted a prototype of a new augmented reality headset called Orion. The company’s latest entry into the smart-eyewear game can project digital representations of media, people, games and communications onto the real world. The Facebook-parent company also debuted the Quest 3s, a more affordable addition to the company’s line of mixed-reality headsets, which hit shelves earlier this month.
The company continues to face legal pressure for the effects of its products on children’s mental health and safety, including a 2023 lawsuit filed by dozens of state attorneys general that alleges the company knowingly makes its platforms addictive to teens. However, the company secured a recent victory when a judge dismissed a shareholder lawsuit claiming the company misled them about its ability to ensure the safety of children on the platform. In September, Meta announced that the accounts of all Instagram users under 18 would be made private by default.
