Entering the end of April, it is time for the U.S. technology giants to concentrate on their earnings reports, but at present, there is a situation of ice and fire, and the joys and sorrows of the "Seven Sisters of U.S. Stocks" in this earnings season can be described as different. Needless to say, for Microsoft and Google, a pair of "top students" with excellent performance and soaring stock prices, Meta contributed revenue and earnings both exceeded expectations, but the stock price plummeted by more than 15% after hours, and the market value evaporated by nearly $200 billion overnight.
According to Meta's financial report, it achieved revenue of $28.65 billion in the first quarter of 2024, an increase of 27% from $28.645 billion in the same period last year, better than analysts' expectations of $36.16 billion, the largest revenue increase in three years. Among them, advertising revenue was US$35.64 billion, a year-on-year increase of 27%, and net profit was US$12.369 billion, an increase of 117% from US$5.709 billion in the same period last year. Its net income per share was $4.71, above expectations of $4.3, driven by higher revenue and a 16% decline in selling and marketing costs from the year-ago quarter.
In terms of specific business data, Meta's family daily active users, including all software, reached an average of 3.02 billion in March this year, and 3.81 billion monthly active users, both up 5% year-on-year. Ad impressions on the Meta app family increased by 20% year-on-year, and the average price per ad increased by 6% year-on-year. Even Reality Labs, which has always been a source of losses for Meta, received good news in the quarter, with an operating loss of $3.85 billion, lower than analysts' expectations of $4.31 billion.
It has been argued that Meta's growth is due to the success of Reels, a short-form video app modeled after TikTok, and Threads, a similar product launched when Musk restricted users from using X (formerly Twitter). Among them, Reels' annualized revenue scale exceeds $10 billion, which has basically caught up with TikTok, and the growth of Threads makes Zuckerberg even more happy.
At the earnings call, Zuckerberg also announced that Threads has more than 150 million monthly active users. In the words of a Wall Street analyst, "advertisers who want to reach their audience in real-time moments finally have a viable alternative to X." ”
However, such a dazzling financial report not only failed to win the favor of investors, but instead triggered a stampede. So what's the problem? Maybe Zuckerberg, the helmsman of Meta, wants to "take this pot on his back".
On the other hand, Tesla's CEO Elon Musk, with his tongue and lotus, was stunned to save Tesla from the impact of bad financial reports, and the stock price rose 12% against the trend. In the first quarter of this year, Tesla's performance could not be said to be without bright spots, almost a mess, its revenue fell by 9% year-on-year, net profit (GAAP) fell by 55%, and global deliveries were 386,800 vehicles, significantly lower than the outside world's forecast of about 430,000 vehicles, down 8.3% year-on-year, and as high as 20.1% quarter-on-quarter.
In addition, just before the release of the financial report for the first quarter of 2024, Musk also announced that Tesla will lay off more than 10% of its employees worldwide to achieve the purpose of reducing costs and increasing efficiency.
Under normal circumstances, under the pressure of multiple negative news, it should be Tesla whose stock price has plummeted. However, Musk emphasized the attributes of Tesla's self-driving and AI on the earnings call, announced that he would accelerate the launch of new models, and came up with a driverless taxi Robotaxi, which can be called a miracle rejuvenation. Although Tesla's new model is still just a "pie", Musk immediately told a "new story" that Tesla is now an artificial intelligence robot company.
This trick of "quenching the thirst of the plum" allowed Musk to successfully get UBS, HSBC, Bank of America and other institutions to upgrade Tesla's rating. If Musk's answer to confidently add the AI label to Tesla made investors feel that the latter had a "bright future", then Zuckerberg's performance on this earnings call made investors feel that Meta had a "bright future".
Meta claimed that full-year capital spending will be raised to $35 billion to $40 billion from the previous forecast of $30 billion to $37 billion, and the move is to further accelerate the infrastructure investment that supports the AI roadmap to build advanced AI models and services.
Zuckerberg, however, shy away from the return on AI investment, saying that "smart investors" will see the long-term possibilities of the job compared to short-term costs. This statement easily reminds investors of Zuckerberg's announcement that Facebook changed its name to Meta and "All in the Metaverse", and it was the increase in the metaverse business that led to Meta's huge losses, which is difficult not to make investors worry that Meta will go on an uncontrolled large-scale money-throwing mode.
What is more likely to surprise investors is Zuckerberg's confidence in the long-term potential of the metaverse and his announcement that he will continue to invest in it. Meta Chief Financial Officer Susan Li said in the earnings conference that with the development of the company's augmented reality and virtual reality business, the operating loss of the Reality Labs division will increase year-on-year.
You know, it was the huge losses in the metaverse business that caused Meta's market value to plummet, and the company's market capitalization soared by more than 450% from the low point of nearly 18 months ago, which was driven by the AI boom.
AI is undoubtedly the biggest driving force behind the rise of Meta's stock price, relying on the open source Llama model, this company has almost become the current leader in open source large models, and its influence in the field of AI large models is no less than OpenAI. As a result, Zuckerberg showed both his disregard for the monetization of AI business and his desire for the metaverse on the earnings call, so it is obviously unrealistic to expect investors to pay for such a "story".
Of course, using the negative is good, and the good is bad, which can also explain the different situations of Meta and Tesla today. After entering 2024, Meta will continue to fluctuate at a higher position in the stock price, and the official outlook will lead to a sell-off in the market if it is slightly unoptimistic, and Tesla's stock price has continued to decline since the beginning of this year.