Why Shares of Meta Stock Are Falling This Week (2024)

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Meta (NASDAQ:META) stock plunged as much as 19%, despite beating first-quarter earnings, so what gives?

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Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances.

Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities.

Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. Amy’s work can be found regularly on the Financial Post and MoneyWise Canada.

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Why Shares of Meta Stock Are Falling This Week (3)

It was a weird one for shareholders of Meta Platforms (NASDAQ:META). Despite beating first-quarter earnings estimates, shares of the stock plunged as much as 19% on market open on Thursday. So, let’s get into what happened and why investors weren’t thrilled with the results.

What happened?

First, we’ll discuss the good news. First-quarter revenue indeed was up 27% year over year, hitting US$36.46 billion. This narrowly beat estimates of US$36.22 billion, with even more growth for the company. Furthermore, costs only rose by 6%, with operating income surging to US$17.66 billion, a 57% increase over last year.

Despite this “good start to the year,” according to Chief Executive Officer (CEO) Mark Zuckerberg, this was marred with a warning by the head of the company. Zuckerberg provided a weak outlook for the second quarter and further noted that more spending would be coming as Meta stock expands into the areas of artificial intelligence (AI) and the metaverse.

This spending would likely be on infrastructure costs, with a forecast to increase capital expenditures between US$35 and US$40 billion in 2024 alone. This would all be in support of its AI roadmap, according to Zuckerberg.

Wall Street isn’t having it

Not only did investors drop their shares of Meta stock on the news of more spending, without the security of monetization, Wall Street also dropped the stock. It was clear that the company’s “Year of Efficiency” was over, and it was back to business as usual. And that “usual” is spending on innovation — innovation that may be unproven when it comes to creating cash flow.

Instead, the Meta CEO stated that costs would grow “meaningfully” in the coming years and that it could be years before the stock sees much revenue from its AI products.

Overall, a whopping 17 analysts downgraded the price target of Meta stock, with just eight raising their view. The median price now stands at US$525 as of writing, only slightly higher than today’s share price of US$426 as of writing.

Some positivity

Despite the news that more costs were coming, it’s important to note that other analysts believe this has long been part of Zuckerberg’s plan. AI-driven engagement on content could see a positivity from users. Further, the stock has taken these times with extra cash on the books to invest in innovation. And AI is a clear choice and potentially clear winner for Meta stock.

The investment overall comes from a position of strength, in the words of one analyst, with management continuing to see a “healthy ad demand” from user engagement.

So, while being on the offensive when it comes to investing is certainly a strong choice, especially during these tough times, Meta stock has long been an innovator. Therefore, some analysts see this as a strong move at the right time, giving the company time to see ad revenue come in from its AI investments.

How long will the investment cycle last? Only time will tell. And how much will that investment pay Meta stock back, if at all?

Why Shares of Meta Stock Are Falling This Week (2024)


Why is META stock going down? ›

The big concern for Meta came in its guidance. The Facebook parent company paired a lower-than-expected Q2 revenue forecast with a higher-than-expected increase in projected 2024 costs.

Is META a good stock to buy right now? ›

Meta Platforms has 10.72% upside potential, based on the analysts' average price target. Meta Platforms has a conensus rating of Strong Buy which is based on 36 buy ratings, 3 hold ratings and 2 sell ratings. The average price target for Meta Platforms is $522.49.

What is the META stock forecast for the next week? ›

The Meta stock forecast for tomorrow is $ 476.34, which would represent a 0.67% gain compared to the current price. In the next week, the price of META is expected to increase by 0.85% and hit $ 477.17.

Is META losing market share? ›

Meta shares tumbled as much as 19% in extended trading on Wednesday, wiping out more than $200 billion in market cap. The drop came despite Meta reporting better-than-expected profit and revenue for the first quarter.

Will Meta go back up? ›

Meta's revenue is projected to jump 18% in FY24 and 13% next year to $180 billion (up from $135 billion in 2023). Meta is projected to grow its adjusted EPS by 35% in FY24 and 16% in FY25, following 73% earnings expansion in 2023.

Is Meta stock expected to rise? ›

Stock Price Forecast

The 40 analysts with 12-month price forecasts for Meta Platforms stock have an average target of 495.18, with a low estimate of 285 and a high estimate of 610. The average target predicts an increase of 5.62% from the current stock price of 468.84.

Should I hold Meta stock? ›

With its 2-star rating, we believe Meta's stock is overvalued compared with our long-term fair value estimate of $400 per share, representing an enterprise value of 11 times our 2024 adjusted EBITDA projection.

What is a fair price for Meta stock? ›

As of 2024-05-20, the Fair Value of Meta Platforms Inc (META) is 374.51 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 471.91 USD, the upside of Meta Platforms Inc is -20.6%.

How much will Meta stock be worth in 5 years? ›

Meta stock will hit $470 in 2025, $580 in 2027, and $765 in 2030, with further gains expected thereafter. For this Meta stock price forecast, we'll be looking at data from the beginning of this year, 2022, all the way through 2030.

Is amzn a buy right now? ›

Amazon Stock: Wall Street Projections For 2024

Of the 64 Amazon stock analysts following the company, 95% hold a buy rating, according to FactSet. Further, FactSet data shows those analysts have, on average, set a 12-month price target of 222.26 for Amazon stock, according to FactSet.

How much will Facebook be worth in 5 years? ›

According to the latest long-term forecast, Facebook price will hit $500 by the end of 2024 and then $700 by the middle of 2025. Facebook will rise to $900 within the year of 2026, $1100 in 2027, $1300 in 2028, $1500 in 2029, $1600 in 2030, $1700 in 2031, $1800 in 2032 and $2000 in 2035.

Is Netflix a buy right now? ›

Is Netflix stock a Buy, Sell or Hold? Netflix stock has received a consensus rating of buy. The average rating score is Baa2 and is based on 64 buy ratings, 25 hold ratings, and 7 sell ratings.

Who holds the most shares of Meta? ›

What percentage of Meta Platforms (META) stock is held by retail investors? According to the latest TipRanks data, approximately 24.45% of Meta Platforms (META) stock is held by retail investors. Vanguard owns the most shares of Meta Platforms (META).

What is the fair value of meta? ›

As of 2024-05-19, the Fair Value of Meta Platforms Inc (META) is 374.51 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 471.91 USD, the upside of Meta Platforms Inc is -20.6%.

Is Tesla a good stock to buy? ›

Overall, about 40% of analysts covering Tesla stock rate the shares a Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Tesla shares is about $182.

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