"Shares of the social media and online advertising giant have been on a wild ride of late. A market selloff driven by concerns around artificial intelligence (AI) spending has sent shares of every major mega-cap tech stock investing heavily in this trend (and Meta is one of the group) down significantly. From Meta's peak this year to its current level, shares are trading off around 25%. That's a big move in a short amount of time, and one for investors to consider."
"Remember the whole debacle around Meta's Reality Labs division? The company's heavy spending on its metaverse goals, in becoming a leader in both the hardware and software supporting virtual reality and a metaverse-driven future, hasn't really led to anything in the way of profitability. And while the company has ramped down its spending considerably in this division, it's the money-losing aspect of trying to be first (or capture some first-mover advantage in a nascent market) that has some investors worried."
Meta Platforms' shares have fallen roughly 25% from their peak this year amid a market selloff driven by concerns over AI-related spending. The stock decline reflects broader weakness among mega-cap tech companies investing heavily in AI. Some investors view the pullback as a long-term buying opportunity, while others worry about the company's aggressive capital allocation. Reality Labs has incurred heavy losses as Meta pursues hardware and software for virtual reality and a metaverse future, with profitability remaining elusive despite scaled-back spending. Ongoing large-scale capex for AI and metaverse initiatives raises analyst scrutiny about long-term returns and corporate profitability.
Read at 24/7 Wall St.
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