Key facts
- Meta shares fell 11% after the Q2 earnings report.
- Meta reported Q2 revenue of $61 billion.
- Q2 revenue was up 28% year-over-year.
- Meta's Q2 profits declined 14% to $6 billion.
- Meta plans to spend $130-$145 billion this year.
- The majority of planned spending is for AI projects.
- Meta's free cash flow hit a five-year low.
Meta Platforms experienced a significant downturn in its stock value, with shares falling 11% after the company announced its second-quarter financial results. Despite reporting a robust revenue of $61 billion, marking a 28% increase compared to the same period last year, Meta's profits saw a decline of 14%, settling at $6 billion. The primary driver for investor apprehension appears to be the company's forward-looking expenditure plans. Meta anticipates spending between $130 billion and $145 billion this year, with a substantial portion earmarked for artificial intelligence projects. This aggressive investment strategy coincides with a concerning trend in Meta's financial health: its free cash flow has receded to a five-year low. The combination of reduced profitability and a projected surge in capital expenditure, particularly for AI, has led to a negative market response, overshadowing the revenue growth achieved in the quarter.