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Meta Platforms Inc. Reports Strong First Quarter Performance

Facebook and Instagram parent company Meta announced on Wednesday that its first-quarter profit has more than doubled compared to the same period last year. This significant increase in profit was attributed to higher advertising revenue and a 6% rise in the average price of ads on its platforms. Despite this positive news, the company’s shares experienced a sharp decline in after-hours trading following a lukewarm revenue guidance.

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In the January-March period, Meta Platforms Inc. reported earnings of $12.37 billion, or $4.71 per share, compared to $5.71 billion, or $2.20 per share, in the same quarter last year. Additionally, revenue saw a 27% increase, reaching $36.46 billion from $28.65 billion.

For the current quarter, Meta projected a revenue range of $36.5 billion to $39 billion, with analysts anticipating revenue of $38.25 billion. The company also revised its 2024 capital expenses forecast to $35 billion to $40 billion, up from the previous range of $30 billion to $37 billion, citing investments in artificial intelligence as a contributing factor.

CEO Mark Zuckerberg highlighted Meta’s focus on AI advancements, unveiling new artificial intelligence systems that power what he refers to as “the most intelligent AI assistant that you can freely use.” The company’s investment in AI aligns with industry trends as leading developers continue to innovate in this space.

Analyst Thomas Monteiro commented on Meta’s earnings, noting the importance of managing revenue expectations. While Meta surpassed estimates in key financial metrics, the lowered revenue forecast for the next quarter impacted investor sentiment.

Despite the challenges faced by Meta, the company reported a continued increase in the number of users across its apps. With 3.24 billion users on average for March, Meta’s “family of apps” including Facebook, Instagram, WhatsApp, and Messenger saw a 7% year-over-year growth.

As part of its efficiency initiatives, Meta reduced its workforce by 10% year-over-year, with CEO Zuckerberg emphasizing 2023 as the “year of efficiency.” The company’s strategic cost-cutting measures aim to streamline operations and optimize resource allocation.

In after-hours trading, Meta’s shares declined by 16%, reflecting investor reactions to the revenue guidance and workforce reduction. Despite this temporary setback, Meta’s stock price has more than doubled over the past year, driven by a resurgence in online advertising.

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