Meta Platforms Inc. shares experienced a decline early Thursday as the Facebook parent company indicated it anticipates a significant rise in spending for the coming year and adjusted the lower end of its capital expenditures guidance for 2024. The company's third-quarter results exceeded market expectations. The technology giant now projects capital expenditures to fall between $38 billion to $40 billion for 2024, reflecting an upward adjustment from the previous lower end of $37 billion, Chief Financial Officer Susan Li noted during a late Wednesday earnings call, reported in a company transcript.
In premarket trading, the stock experienced a 3.8% decline. Li highlighted that the company is expecting "significant" growth in capital expenditures for next year. She stated, "Given this, along with the back-end weighted nature of our 2024 capital expenditure, we foresee a notable acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet." Meta, which is also the parent company of Instagram and WhatsApp, continues to face operating losses within its Reality Labs unit, projected to "increase meaningfully" on an annual basis this year due to continuous product development efforts and investments aimed at scaling its ecosystem, according to Li.
This division reported a loss of $4.43 billion for the September quarter, contributing to a total of $12.76 billion for the first nine months of the year. The company's total expenses for the year are now estimated to be between $96 billion and $98 billion, compared to the previous outlook of $96 billion to $99 billion, as informed to analysts by Li. In the third quarter, Meta reported net earnings of $6.03 a share, up from $4.39 the previous year, exceeding the Capital IQ consensus estimate of $5.30.
The overall revenue increased by 19% year-over-year, reaching $40.59 billion, surpassing the Street's expectation of $40.31 billion. Chief Executive Mark Zuckerberg described the quarter as successful, saying, "This was a good quarter with strong product and business momentum. We are making substantial progress with our artificial intelligence (AI) efforts as well, and we're witnessing a positive impact from AI across nearly all facets of our operations — from core business engagement and monetization to long-term plans for new services and computing platforms." Ad revenue rose by 19% year-on-year to $39.89 billion for the quarter, although this growth was slower compared to the 22% increase noted in the previous quarter.
Average price per ad and total ad impressions improved by 11% and 7%, respectively. Additionally, daily active users across Meta's family of apps, which include Facebook, Instagram, and WhatsApp, grew by 5% to an average of 3.29 billion in September. Looking ahead, Meta forecasts fourth-quarter revenue to range between $45 billion and $48 billion, operating under the assumption that foreign currency effects will have a neutral impact on year-over-year growth based on current rates.
Street expectations are set at $46.65 billion. Zuckerberg remarked, "Our AI investments continue to demand significant infrastructure, and I plan to sustain substantial investments in that area moving forward. We haven't finalized a budget yet, but these are the general trends I’m observing.".