Meta Shares Dip 3.15% Amid Growth Worries and Earnings Anticipation
1min read On October 23, shares of Meta (META) fell by 3.15%. This decline follows anticipation ahead of the company's earnings report for the third quarter of fiscal year 2024, set to be announced on October 30. Analysts expect stable performance overall but foresee challenges due to slowing revenue growth and rising expenses. Despite hitting record highs, there's skepticism about further upward potential for the stock.
Looking ahead to 2025, Meta faces the critical challenge of finding new revenue streams as its substantial AI investments begin to impact financial statements. With revenue growth naturally slowing, the company may focus on maximizing existing platforms like Reels and WhatsApp or innovating new solutions to counterbalance rising costs and depreciation of AI infrastructure.
The need for accelerated growth is evident as businesses strive to maintain high return levels amidst increasing expenses. The anticipated trend shows expenses may outgrow revenues leading to declining profit margins, establishing a more challenging environment for profit growth by 2025.
Thus, maintaining a competitive edge will require Meta to continue its strategic investments in AI while managing short-term profitability pressures until long-term efficiencies emerge from these investments. This could potentially alter market perceptions about the company's intrinsic value.
Meta's future hinges on effectively leveraging AI to enhance product offerings on both user-facing and backend operations fronts. This strategic alignment with AI emphasizes improving existing services, unlike competitors like Google and Microsoft, where new AI enhancements seem more supplementary.
With the company's growth entering a potentially slower phase and analysts questioning further stock price elevations, market reactions post-earnings could trend downward, especially if the reported outcomes do not strongly beat expectations. This aligns with the technical analysis suggesting Meta may have reached critical chart levels, possibly concluding a prolonged rally.
