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· Posted on
April 29, 2024

Meta’s share price drops 16% as investors tire of its somewhat delusional ideas

Meta's share price has dropped 16%, which reduced the company's value by $200 billion USD.

What's the key learning?

  • Zuck has warned that the investors that Meta’s share price will probably bounce around because that’s what happened in the past when Meta was scaling new products… before monetising them.
  • When Meta invested in mobile apps, investors were somewhat sceptical... But they turned out to be big money spinners.
  • And, when Meta invested in the Metaverse, investors were also sceptical.. And so far it has amounted to nothing apart from a company name change of course.

👉 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.

What's the key learning?

💡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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