Meta Platforms Inc., the parent company of Facebook, Instagram, WhatsApp, and Messenger, reported stronger-than-expected earnings for the second quarter of 2024. This news sent its stock soaring and had a ripple effect on the broader market, particularly in the tech and AI sectors. However, the company also warned of significant capital expenditures in the coming year, primarily driven by investments in artificial intelligence (AI) and infrastructure. Here are the key takeaways from Meta’s earnings report and its market impact.
Key Takeaways
- Meta’s Q2 earnings exceeded analyst expectations, with revenue rising 22% year-over-year to $39.07 billion.
- The company reported a 73% increase in net income, reaching $13.47 billion.
- Daily active users across Meta’s family of apps grew by 7% to 3.27 billion.
- Meta’s stock surged by 5% in after-hours trading following the earnings announcement.
- Significant investments in AI and infrastructure are expected to drive up capital expenditures in 2025.
Strong Financial Performance
Meta’s financial performance in Q2 2024 was robust, with revenue climbing 22% to $39.07 billion, up from $32 billion in the same period last year. The company’s net income also saw a significant boost, rising 73% to $13.47 billion, or $5.16 per share, compared to $7.8 billion, or $2.98 per share, a year earlier. These results exceeded analysts’ expectations, who had predicted earnings of $4.72 per share on revenue of $38.26 billion.
User Growth and Engagement
The number of daily active users (DAUs) for Meta’s suite of apps, including Facebook, Instagram, WhatsApp, and Messenger, reached 3.27 billion in June 2024, marking a 7% increase from the previous year. Notably, WhatsApp has surpassed 100 million monthly users in the U.S., and Meta’s new social platform, Threads, is approaching 200 million monthly users.
AI and Infrastructure Investments
Meta’s CEO, Mark Zuckerberg, emphasized the company’s commitment to AI, stating that Meta AI is on track to become the most used AI assistant globally by the end of the year. The company plans to significantly increase its capital expenditures in 2025 to support AI research and product development. This includes investments in data centers and computing capacity, which Zuckerberg noted are essential for training advanced AI models like Llama 4.
Market Reaction
Meta’s strong earnings report had a positive impact on its stock, which rose by 5% in after-hours trading. The broader market also reacted favorably, with tech stocks and AI-related companies seeing gains. Analysts view Meta’s performance as a bellwether for the tech industry, particularly for companies investing heavily in AI.
Future Outlook
Looking ahead, Meta expects its third-quarter revenue to be between $38.5 billion and $41 billion, slightly above analysts’ expectations of $39.1 billion. The company has not yet provided guidance for 2025 but indicated that infrastructure costs would be a significant driver of expense growth. Despite the anticipated rise in capital expenditures, analysts remain optimistic about Meta’s ability to sustain its growth trajectory, particularly in the AI and advertising sectors.
Meta’s strategic focus on AI and its robust advertising revenue position it well for future growth. However, the company will need to manage its rising expenses carefully to maintain investor confidence.
Sources
- Facebook parent Meta posts stronger-than-expected Q2 results, sending shares higher after hours | AP News, AP News.
- Meta earnings: Stock rises as the Facebook parent gives upbeat outlook – MarketWatch, MarketWatch.
- Stock Market Today: Dow Jones Rises Amid Key Data; Meta Surges, Arm Dives On Earnings | Investor’s Business Daily, Investor’s Business Daily.
- Stock market today: Indexes dip after Meta earnings and new labor-market data, markets.businessinsider.com.
- Market News, July 31, 2024: S&P 500, Nasdaq Close Sharply Higher on Chip Stock Rally, Rate-Cut Hopes, Investopedia.