Meta Drops By $200 Billion In Value After Mark Zuckerberg Earnings Call Announcement 

The share price for Meta has reportedly fallen nearly $200 billion since a controversial announcement was recently made by Mark Zuckerberg. The company reported the results overnight, which reflected revenues that fell below expectations and higher costs that rose above them. Most of it was a result of the investments made into artificial intelligence (AI).

Mark Zuckerberg Claims It May Take ‘Several Years’ Before AI Starts Making Money

Meta Chief Executive Mark Zuckerberg stated that it may take “several years” before the company’s work on AI scales up enough to become profitable. This announcement sparked fears and concerns among investors.

The biggest concern is that the substantial investments made by the company into artificial intelligence may not reap any returns. Many investors are concerned that the company may not be as profitable than previously expected.

Zuckerberg Opened Earnings Call By Highlighting ‘Many Ways Meta Loses Money’

Zuckerberg started off the earnings call by discussing artificial intelligence. He also referenced the metaverse overall, promoted the company’s headsets, glasses and its operating system.

According to CNBC, Zuckerberg “spent almost the entirety of his opening remarks focused on the many ways Meta loses money.” Investors did not have a positive response to the news.

Meta Share Sell-Off Reflects $190 Billion Plummet, Decreased Value

The aftermath of the heavily-criticized announcement from Mark Zuckerberg did not take very long to have an adverse impact on stock value. A sell-off was triggered that showed Meta shares plummeting over $190 billion Thursday morning when trading opened.

Further reports indicate that the value fell nearly 15 percent.

Ripple Effect Impacts Share Prices For Other Social Media Platforms

The doubts and concerns of Meta apparently did not remain within the boundary lines of the company’s social media platforms and other applications. Multiple reports confirm that the concern essentially created a ripple effect that impacted other social media platforms as well.

For instance, Amazon, Microsoft and Alphabet were down between 1.5% and 2.7%. Snapchat fell in value by nearly 5%.

Mark Zuckerberg: ‘We’ve Historically Seen A Lot Of Volatility In Our Stock’

Zuckerberg acknowledged that “we’ve historically seen a lot of volatility in our stuck during this phase of our product playbook.” He added that they are “investing in scaling a new product but aren’t yet monetizing it.”

Zuckerberg tried to compare it to previous efforts with similar starts – such as the short-video service Reels integrated into Facebook, Stories, and the platform’s transition to mobile.

Zuckerberg Tried To Reassure Investors With Overall Potential Of AI Models

Zuckerberg tried to reassure Meta investors that there is still a lot of money to be made within the world of artificial intelligence. He stated that “there are several ways to build a massive business here.”

Zuckerberg referenced such specific examples as “scaling business messaging” and the introduction of advertisements. He also referenced “paid content into AI interactions.”

Zuckerberg Discussed ‘Enabling People To Pay To Use Bigger AI Models’

Zuckerberg may have even referenced the possible introduction of a subscription-based model as well. He stated that there is the possibility of “enabling people to pay to use bigger AI models and access more compute.”

According to Zuckerberg, “AI is already helping us improve app engagement.” He added that this “naturally leads to seeing more ads and improving ads directly to deliver more value.”

Chief Executive Highlighted Meta Llama 3, Meta AI Rollouts

Chief Executive Zuckerberg also highlighted such developments as Meta Llama 3 and Meta AI during the earnings call as well. Meta Llama 3 is the most recent addition to the language models used at Meta.

Meta AI is reportedly how the company strives to respond to the ChatGPT model developed and launched by OpenAI. He emphasized the efforts that the company has put forth overall towards creating a “leading AI.”

Meta Is Exploring Potential Expansion Of Mixed Reality Headset Market

It was also confirmed that Meta is considering an expansion of the mixed reality headset industry with substantial contributions and developments to the market. For instance, there is a potential opportunity to create a headset specifically designed for fitness or work.

The operating system that powers the expanding line of Quest headsets was opened up with unlocked access Monday. Zuckerberg claims this open access will allow the mixed reality ecosystem to expand at a much quicker pace.

Zuckerberg Described Meta’s AR Glasses As ‘Ideal Device For An AI Assistant’

Mark Zuckerberg highlighted Meta’s AR glasses during the earnings call. He referred to them as the “ideal device for an AI assistant.”

According to Zuckerberg, that is the case since “you can let them see what you see and hear what you hear.” The Reality Labs unit of Meta reportedly continues to bleed cash.

Reality Labs Reported Nearly $4 Billion In First Quarter Losses

Reality Labs, which houses all of the software and hardware that Meta uses to develop its metaverse, reported sales of $440 million during the opening quarter of the year. This number may seem like a substantial profit for any business.

However, the same division also generated losses of $3.85 billion within the same quarter. One report claims that the cumulative losses of Reality Labs reached $45 billion.

Meta Finance Chief Supported Zuckerberg, Referenced ‘Long-Term Potential’

Meta Finance Chief Susan Li supported Mark Zuckerberg by echoing the remarks made by the company’s chief executive. She agrees that the company must develop scale products and advanced models to create meaningful revenue.

Li indicated that “there is tremendous long-term potential.” However, she also acknowledged that “we’re just much earlier on the return curve.”

Investors Started To Trim Holdings Before Earnings Call Started

Investors reportedly started to trim their holdings even before the earnings call began. According to CNBC, that was caused by the light revenue forecast that Meta previously issued for the second quarter.

Seeing the projections for the second quarter clearly overrode any first quarter beat for a significant number of investors.

Zuckerberg Referenced History Of Investment Returns For ‘Investors Who Stuck With Us’

Zuckerberg indicated that historically investments to “build these new scaled experiences in our apps has been a very good long-term investment for us.” He also noted that they were good long-term investments for “investors who stuck with us.”

He stated that the “initial signs are quite positive here, too.” According to Zuckerberg, the construction of a “leading AI will also be a larger undertaking than the other experiences” added to Meta apps.