After Shares fell 11% Thursday afternoon after the company issued weak revenue guidance that overshadowed first-quarter earnings. The stock was trading around $438 as of 1 p.m. ET, on pace for its worst day since October 2022 and wiping about $141 billion in market capitalization from its closing price of $493.5 before Wednesday’s earnings.
The company reported $4.71 in earnings per share on $36.46 billion in revenue for the quarter, beating estimates of $4.32 in earnings per share and $36.16 billion in expected sales, according to LSEG.
The stock sell-off picked up pace in extended trading on Wednesday after CEO Mark Zuckerberg discussed spending in areas such as artificial intelligence and mixed reality that are not currently profitable.
Meta expects second-quarter revenue of $36.5 billion to $39 billion. The midpoint of the range, $37.75 billion, fell short of the average analyst estimate of $38.3 billion.
Meta CEO Mark Zuckerberg attends a Senate Judiciary Committee hearing on the online sexual exploitation of children at the US Capitol in Washington, DC on January 31, 2024.
Nathan Howard | Reuters
Analysts at JPMorgan reiterated an overweight rating on Meta, while cutting their price target to $480 from $535, citing the company’s increasingly heavy AI investments that they believe may eventually pay off.
“Meta’s virtual ownership of the social graph, strong competitive moat and focus on user experience make it an enduring blue-chip company built for the long term,” they wrote in a note on Thursday.
Bernstein analysts, while maintaining an outperform rating on Meta shares, cut their price target to $565 from $590 and described the company’s current business strategy as an “expensive attack” with higher payback.
“We have the uncertainty, but Meta is worth keeping an elevated multiple here,” they wrote in a note on Wednesday. “Without sounding too religious, whether you believe in Zuck or not, we do too.”
Analysts at Barclays maintained an overweight rating on Meta stock and cut their price target to $520 from $550 in a note to investors on Wednesday. They reaffirmed their belief in the “long-term name” despite expecting it to be “a bumpy run for the rest of 2024 as revenue growth rates slow considerably from here.”
“If there’s one thing META has proven over the years, it’s that it’s exceptionally good at executing during major technology changes on the platform, arguably the best,” wrote Barclays analysts. “We haven’t heard anything from Zuckerberg that is of great concern.”
— CNBC’s Michael Bloom contributed to this report.