Shares of Facebook parent company Meta plunged 16.5 per cent in after-hours trading on Wednesday after the company issued a sluggish second-quarter forecast and said it expects a substantial increase in operating losses in its Reality Labs division in 2024.
The California-based technology company said it expects second-quarter revenue to hover between $36.5 billion and $39 billion.
Its mid-point of $37.75 billion is nearly 18 per cent up on a yearly basis but below analysts’ average estimate of $38.3 billion.
Reality Labs, which includes augmented and virtual reality-related consumer hardware, software and content for the Metaverse, reported an operating loss of more than $3.8 billion in the first quarter of the year.
Susan Li, Meta’s chief financial officer, said the company expects Reality Labs' operating losses to increase “meaningfully year over year” in 2024 due to continuing product development and investments to further increase its ecosystem.
The company reported a 117 per cent annual increase in first-quarter net income to almost $12.4 billion.
Revenue during the January-March period rose 27 per cent to nearly $36.5 billion, marginally beating analysts’ expectations of $36.2 billion.
Meta’s shares closed 0.52 per cent down at $493.50 on Wednesday, giving the company a market value of $1.25 trillion.
But after the earnings announcement and issuance of weaker than expected outlook, the stock slumped 16.51 per cent in after-market hours to trade at $412.
The company's shares have dropped nearly 2 per cent in the past month.
In the first quarter, advertising impressions across Meta’s apps increased 20 per cent on a yearly basis while the average price for an advertisement soared by 6 per cent year on year.
Meta’s family of apps includes Facebook, Instagram, Messenger and WhatsApp.
"It's been a good start to the year," said Mark Zuckerberg, Meta founder and chief executive, during the earnings call.
"We are seeing healthy growth across our apps and we continue making steady progress building the metaverse as well.
“On the upside, once our new AI [artificial intelligence] services reach scale, we have a strong track record of monetising them effectively."
Meta, which employs more than 69,329 people, expects its full-year 2024 total expenses to be between $96 billion and $99 billion, updated from its prior outlook of $94 billion and $99 billion due to higher infrastructure and legal costs.
From the latest earnings announcement, Meta has stopped disclosing Facebook’s daily active users and monthly active users. It is now sharing a figure called “family daily active people”.
It stood at 3.24 billion in the last quarter, an increase of 7 per cent.
“Amid lower expected revenue and higher operational costs, which will fatally lead to less user acquisition spending, growth in family daily active people could very well hit negative numbers next quarter,” Thomas Monteiro, senior analyst at Investing.com, told The National.
"Against this backdrop, investors are pricing in tighter margins for Meta than previously expected, which means fewer competitive advantages, particularly in the innovation field, both VR and AI.”
The company's advertising revenue contributed nearly 97.7 per cent to overall sales in the first quarter, growing by about 26.8 per cent on an annual basis to more than $35.6 billion.
Revenue from other streams – including the Reality Labs unit – jumped 50.7 per cent on an annual basis to more than $820 million.
The company expects its 2024 capital expenditure to hover in the range of $30 billion and $35 billion, a $3 billion increase in the high end of its earlier range, as it accelerates its infrastructure investments to support its AI road map.
Ms Li said capital expenditures will continue to increase in 2025 as Meta invests “aggressively to support ambitious AI research and product development efforts”.
After Meta’s ambitious AI road map and escalating capital expenditure, analysts are optimistic.
“Meta still has several growth drivers that are likely to produce pick-up throughout the year as the company implements less ad-reliant monetisation strategies,” Mr Monteiro said.
“Both WhatsApp and the Metaverse show promise in that area and could be the drivers of the next leg up for the company."
Six large-scale objects on show
- Concrete wall and windows from the now demolished Robin Hood Gardens housing estate in Poplar
- The 17th Century Agra Colonnade, from the bathhouse of the fort of Agra in India
- A stagecloth for The Ballet Russes that is 10m high – the largest Picasso in the world
- Frank Lloyd Wright’s 1930s Kaufmann Office
- A full-scale Frankfurt Kitchen designed by Margarete Schütte-Lihotzky, which transformed kitchen design in the 20th century
- Torrijos Palace dome
Know your Camel lingo
The bairaq is a competition for the best herd of 50 camels, named for the banner its winner takes home
Namoos - a word of congratulations reserved for falconry competitions, camel races and camel pageants. It best translates as 'the pride of victory' - and for competitors, it is priceless
Asayel camels - sleek, short-haired hound-like racers
Majahim - chocolate-brown camels that can grow to weigh two tonnes. They were only valued for milk until camel pageantry took off in the 1990s
Millions Street - the thoroughfare where camels are led and where white 4x4s throng throughout the festival
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
if you go
The flights
Fly direct to Kutaisi with Flydubai from Dh925 return, including taxes. The flight takes 3.5 hours. From there, Svaneti is a four-hour drive. The driving time from Tbilisi is eight hours.
The trip
The cost of the Svaneti trip is US$2,000 (Dh7,345) for 10 days, including food, guiding, accommodation and transfers from and to Tbilisi or Kutaisi. This summer the TCT is also offering a 5-day hike in Armenia for $1,200 (Dh4,407) per person. For further information, visit www.transcaucasiantrail.org/en/hike/
The Settlers
Director: Louis Theroux
Starring: Daniella Weiss, Ari Abramowitz
Rating: 5/5
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
UAE currency: the story behind the money in your pockets
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ENGLAND TEAM
England (15-1)
George Furbank; Jonny May, Manu Tuilagi, Owen Farrell (capt), Elliot Daly; George Ford, Ben Youngs; Tom Curry, Sam Underhill, Courtney Lawes; Charlie Ewels, Maro Itoje; Kyle Sinckler, Jamie George, Joe Marler
Replacements: Luke Cowan-Dickie, Ellis Genge, Will Stuart, George Kruis, Lewis Ludlam, Willi Heinz, Ollie Devoto, Jonathan Joseph
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INDIA SQUADS
India squad for third Test against Sri Lanka
Virat Kohli (capt), Murali Vijay, Lokesh Rahul, Shikhar Dhawan, Cheteshwar Pujara, Ajinkya Rahane, Rohit Sharma, Wriddhiman Saha, Ravichandran Ashwin, Ravindra Jadeja, Kuldeep Yadav, Mohammed Shami, Umesh Yadav, Ishant Sharma, Vijay Shankar
India squad for ODI series against Sri Lanka
Rohit Sharma (capt), Shikhar Dhawan, Ajinkya Rahane, Shreyas Iyer, Manish Pandey, Kedar Jadhav, Dinesh Karthik, Mahendra Singh Dhoni, Hardik Pandya, Axar Patel, Kuldeep Yadav, Yuzvendra Chahal, Jasprit Bumrah, Bhuvneshwar Kumar, Siddarth Kaul
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Sholto Byrnes on Myanmar politics
More from Rashmee Roshan Lall
The specs
Engine: 3.8-litre twin-turbo flat-six
Power: 650hp at 6,750rpm
Torque: 800Nm from 2,500-4,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 11.12L/100km
Price: From Dh796,600
On sale: now
The biog
Favourite book: Animal Farm by George Orwell
Favourite music: Classical
Hobbies: Reading and writing
MATCH INFO
Uefa Champions League semi-finals, first leg
Liverpool v Roma
When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome
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David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
Panipat
Director Ashutosh Gowariker
Produced Ashutosh Gowariker, Rohit Shelatkar, Reliance Entertainment
Cast Arjun Kapoor, Sanjay Dutt, Kriti Sanon, Mohnish Behl, Padmini Kolhapure, Zeenat Aman
Rating 3 /5 stars
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Hydrogen: Market potential
Hydrogen has an estimated $11 trillion market potential, according to Bank of America Securities and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases six-fold.
"We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically,” the bank said in a recent report.
Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.
The cost of electrolysers used in green hydrogen production has halved over the last five years and will fall to 60 to 90 per cent by the end of the decade, acceding to Haim Israel, equity strategist at Merrill Lynch. A global focus on decarbonisation and sustainability is also a big driver in its development.
SUNDAY'S ABU DHABI T10 MATCHES
Northern Warriors v Team Abu Dhabi, 3.30pm
Bangla Tigers v Karnataka Tuskers, 5.45pm
Qalandars v Maratha Arabians, 8pm
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
JUDAS AND THE BLACK MESSIAH
Directed by: Shaka King
Starring: Daniel Kaluuya, Lakeith Stanfield, Jesse Plemons
Four stars
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Andor
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Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
