Why Shares of Meta Are Sinking After Earnings Report

You take a look at what the market thinks and it's not good. Medicare currently has a gap of more than 12%. After hours, what do you think is the big concern right now? Is it that revenue outlook or is it that big increase, of course, in CapEx and expenses? Yeah, I mean, listen, I think, first of all, the actual quarter is pretty good in my opinion. I mean, if you look at the top line growing 25-27%, that's a good number for them. They probably will be when, when you look at, you know, the rest of the kind of competitors that are out there, they will probably far outperform everyone else on the digital ad side.

But when you look at the guidance here for the second quarter on the revenue side, it's definitely a little disappointing. But we do believe that the biggest disappointment is in the CapEx figures. When I look at it and see why you've been able to see the momentum that you've been able to see here over the last 5 or 6 quarters, a big reason why you've really been able to, you know, keep those quality controls very tight, because They have seen an acceleration in the top line. Everyone already knew that growth was going to start to slow as we moved into the second quarter and, more importantly, the second half of the year in some of those more difficult comparisons.

But I think the expectation of most was that they were going to keep those costs under control. And I think the fact that we're not actually seeing that is definitely scaring a lot of investors until it looks like what you're saying is that the year of efficiency is over and apparently traders don't like it. Yeah, I mean, I'd go as far as that. I mean, I think it's definitely a disappointment for traders. And, you know, it's definitely the end of an era in terms of those lost controls that we've seen from the company. And the question now is, what is the company going to say on the call in terms of expectations not only in the second half of the year, but rather in 2025?

What kind of comments do they make? Do they alleviate some of the concerns we're seeing now or not? I'm curious. I mean, I know there's a big focus on their costs and obviously the amount of CapEx and spending they're going to do on AI. But let's talk a little bit about your traditional business, which is still this challenging revenue stream, the advertising business that we're running and we're already in an election year, which typically tends to benefit advertisers. There has been a lot of discussion about how a tick, ban, or divestment could actually help some of the other social media platforms, like meter platforms, etc., here.

Do you think growth will continue in that unrestricted advertising space? I mean, we actually believe that if anything it helps, you know, the growth trajectory of the digital advertising space. You're absolutely right. I mean,

meta

is in many ways, unlike other, mag seven kind of names, you know, they're more of a one-trick pony and they're really tied into that digital advertising space. right now. Our view is that it will be able to grow almost double by 2025, and I will definitely help you in that regard. We've seen an increase in participation on the Metis side here in recent memory because they've been able to act and move very quickly with some of their AI initiatives, creating some of that great admiration for some. of those advertisers that will continue to gain momentum, we believe, over the next few quarters.

And that should help its overall business and the growth trajectory of the digital advertising space. But yeah, I mean, across the board, I mean, again, communications are getting a lot more difficult as the second half of this year goes on. Yes, of course, as you get to 2025 and surpass these kinds of numbers that you're seeing right now. However, I'm curious long term about the user base. I guess there's been a lot of talk about the age of some of your users now, particularly on Facebook, but even on Instagram. And I could tell you with the children in my family that none of them mentioned better properties.

It's all, you know, clatter and discord and, you know, some of his technical talk and stuff like that here. Do they have a generational problem that they will have to face at some point? You know, I think there's a problem to some extent on that side of things. I mean, I think you've been able to see some improvement with reels over the year in the last few quarters. And, you know, I think there are more and more people out there, you know, going towards that Instagram platform on the Gen Z side. But I think you have a valid point.

I think when you look at the kinder population of the next Generation Z, it's like a tick, it's a click. But, you know, I think that, you know, when we think about the stuff here, they're starting to find their way here with the reels. I think there will be other types of tools that they will release that could potentially help improve that ecosystem. And then we also have to see what happens with tick Tock here over the next year that could help your business improve engagement levels and whatever. So. Believe. Yeah, I think you have a pretty valid point.

But yeah, that being said, I don't think there's a good place to do it yet.