[Financial Summary] Meta net profit increased by 73% and surged by over 7% after hours! What will happen in the future?
Facebook's parent company, social media and digital advertising giant $Meta Platforms (META.US)$announced financial results for the 2nd quarter of 2024 after closing the US stock market on 7/31 (Wednesday).Sales increased 22% compared to the same period last year to 39 billion71 million dollars, and net profit increased 73% to 13.4 billion65 million dollarsIt was.Five consecutive quarters of increase in sales and profitIt was.
![[Financial Summary] Meta net profit increased by 73% and surged by over 7% after hours! What will happen in the future?](https://sgsnsimg.moomoo.com/sns_client_feed/181250687/20240801/4edfbdcc26ad4c1c808094bb72050236.png/big?area=105&is_public=true)
The profit growth rate for the second quarter was sluggish from the 27% increase in the first quarter compared to the same period last year, but total sales increased 7% from the previous quarter, and EPS significantly exceeded 4.71 dollars in the first quarter, both indicating that investment in AI came to fruition in terms of performance.
![[Financial Summary] Meta net profit increased by 73% and surged by over 7% after hours! What will happen in the future?](https://sgsnsimg.moomoo.com/sns_client_feed/181250687/20240801/55585777adb84436af62ba6861b0ad10.png/big?area=105&is_public=true)
The indicator that Wall Street is paying the most attention to is capital investment, including AI investmentInitially, the market anticipated that Meta's capital investment amount for the second quarter would reach 9.5 billion dollars, an increase of about 50% from the same period last year, and that the capital investment amount for the full year of 2024 would be close to 38 billion dollars.
When Meta announced quarterly financial results in late April, it raised the full-year capital investment amount from 35 billion dollars to 40 billion dollars, a maximum increase of 42% compared to the previous year, but Wall Street is concerned that this huge investment has not yet brought a big return of increased sales and profit, and stock prices fell 15% due to news after financial results were announced.
Meta raised its forecast for the lower end of the range for capital investment amounts for the full year by 2 billion dollars according to its latest 2nd quarter report, but the forecast for the upper range limit remains unchanged,Investors' concerns about the disorderly increase in capital investment have abated somewhat。
When Meta announced quarterly financial results in late April, it raised the full-year capital investment amount from 35 billion dollars to 40 billion dollars, a maximum increase of 42% compared to the previous year, but Wall Street is concerned that this huge investment has not yet brought a big return of increased sales and profit, and stock prices fell 15% due to news after financial results were announced.
Meta raised its forecast for the lower end of the range for capital investment amounts for the full year by 2 billion dollars according to its latest 2nd quarter report, but the forecast for the upper range limit remains unchanged,Investors' concerns about the disorderly increase in capital investment have abated somewhat。
![[Financial Summary] Meta net profit increased by 73% and surged by over 7% after hours! What will happen in the future?](https://sgsnsimg.moomoo.com/sns_client_feed/181250687/20240801/a373ee96e8864708a2f736b19e77bb7c.jpg?area=105&is_public=true)
Large US high-tech stocks, which have been leading the market throughout this year, softened all at once in July. Google's parent company $Alphabet-A (GOOGL.US)$、 $Tesla (TSLA.US)$、 $Microsoft (MSFT.US)$Both have lowered their stock prices after the announcement of financial results for the 2nd quarter, and the market is paying attention to whether Meta can break through the jinx thrown at high-tech stocks.
Meta will invest a large amount of money in the Meta universe from 2022 onwards, and there are concerns that the return on current high-level investment in AI and strategies for long-term growth is unclear.
In particular, Microsoft's cloud revenue growth in the second quarter was poor, and after capital investment in Alphabet, which is Google's parent company, exceeded expectations, investors are more concerned about whether Meta will increase capital investment, and when and how AI investment will lead to a specific driving force for earnings and profit growth.
Meanwhile, investorsConcerned about whether Meta plans to continue to invest heavily in AIDoing it.
Meta CEO Zuckerberg recently stated that the company will invest significant resources in the open source AI platform “Llama” over the next 5 years, and Meta is also one of the main customers of NVIDIA's data center accelerator, which is the “darling of AI,” and has purchased approximately 0.6 million H100 GPUs.
Jeffries analysts have listed the following three opportunities for Meta to monetize Llama. ① Improved support and security features”Professional commercial edition” ② Allows customers to personalize models, develop applications, and train models from scratch”AI services” ③ Due to increased user interaction and engagement”Increase in ad revenue」
Meta's main revenue source is still heavily dependent on conventional social media platforms, so the strength of advertising sales is also attracting attention. Last week, Google's parent company announced that search ad revenue for the second quarter had exceeded expectations, but ad sales on the video platform YouTube fell short of expectations.
Similar to Google, Meta, which ranks second after Google in terms of digital advertising market share, is doing well with advertisement placement for this year's US presidential election and the Paris Summer Olympics, and investment in AI is also useful for improving the accuracy and return of advertisement targeting.
Channel surveys of major securities companies such as Jeffries, Evercore ISI, and Wedbush all point out that the overall advertising spending environment continues to be strong, and advertising budgets allocated to meta will grow significantly in particular.
Bank of America Securities analyst Justin Post said that Meta may not raise its capital investment forecast for 2024 again like in the first quarter,Risks of rising operating expenses due to increased litigation costs and non-cash cost factorsI think there might be one.
Meta is facing a crisis of fines for violating the first huge antitrust law in EU history. This week, the US state of Texas reached a 1.4 billion dollar settlement with Meta to resolve allegations that Meta used biometric data without permission from local residents.
Meta's management teamAn opportunity to make a more constructive assessment of the return on investment in AIThere was, Mr. Post says. YouTube's failure in ad revenue may also have lowered the hurdle. I believe that improvements to advertising with short reels, messaging, and AI are still in the early stages.
“The cost reduction of Meta's augmented reality/virtual reality program has the potential to significantly boost investor sentiment, even if that reduction is directed towards AI spending,” he said.
Furthermore,Many analysts are bullish on the open source nature of Meta's large-scale language model “Llama”It has been evaluated by
Jeffries believes that the open source model will give Meta an advantage over competitors in terms of value creation and establishment of AI leadership, and likens Meta's strategy to the success of Linux, and suggests the possibility that llama will become a basic element of future AI software.
According to Melius Research, the latest version of the Llama big language model is a model that is “more explainable, commercially viable, and accessible than ever before,” and all competitors will continue to invest heavily in rapid upgrades to models and software stacks.
Meta's financial results analysis focuses on the recovery in ad revenue and loss trends in the metaverse>>https://live.moomoo.com/course/content-detail?course_id=116569§ion_id=231058249&type=1&open_type=graphics&redirect_url=&source=share&channel=news
Source: moomoo, Nihon Keizai Shimbun
ー MooMoo News Evelyn
This article uses automatic translation for some of its parts
Jeffries believes that the open source model will give Meta an advantage over competitors in terms of value creation and establishment of AI leadership, and likens Meta's strategy to the success of Linux, and suggests the possibility that llama will become a basic element of future AI software.
According to Melius Research, the latest version of the Llama big language model is a model that is “more explainable, commercially viable, and accessible than ever before,” and all competitors will continue to invest heavily in rapid upgrades to models and software stacks.
Meta's financial results analysis focuses on the recovery in ad revenue and loss trends in the metaverse>>https://live.moomoo.com/course/content-detail?course_id=116569§ion_id=231058249&type=1&open_type=graphics&redirect_url=&source=share&channel=news
Source: moomoo, Nihon Keizai Shimbun
ー MooMoo News Evelyn
This article uses automatic translation for some of its parts
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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